[2] The flow on effects of the financial crisis of 2007–08 and nervous reaction of investors lowered overall confidence in the market and saw over 50 finance companies in New Zealand fail by 2010.
In December 2011 the Financial Markets Authority (FMA) announced that it proposed to file civil proceedings against Hotchin and the other directors and promoters of Hanover.
[2] He bought the successful taxi company Corporate Cabs, expanded it and sold it in 1999 to former Skellerup Group boss Murray Bolton.
In 2003 Hotchin through the Hanover Group bought a 10% stake in Tower,[12] a large fund management and insurance business.
Controversially Hanover Finance paid NZ$45.5 million in dividends to Hotchin and Watson in the year ending 30 June 2008.
[15] After a vote over 85% of investors agreed to a debt repayment plan for the return of their capital over a 5-year time scale, predicated on the recovery of the New Zealand property market.
[7] Over the first year of the debt repayment plan, six cents in the dollar was repaid to investors, however the property market had continued to worsen and it appeared the company was heading for receivership.
This transaction resulted in Allied Farmers assuming the net asset position of the Hanover Group finance companies.
[8] As a result of the FMA's announcement former Hanover Finance's chairman Greg Muir issued a media statement saying that "the FMA investigators were given a substantial amount of evidence demonstrating that the directors conducted themselves responsibly, with appropriate rigour, and made judgments they believed were in the best interests of the company and its investors on the information available to them at the time.
[20] Emails provided by Rawshark to Fairfax Media appear to show that Hotchin secretly paid right wing bloggers Cameron Slater and Cathy Odgers to write attack posts undermining the Serious Fraud Office, its chief executive Adam Feely, and the Financial Markets Authority, while they were investigating the collapse of Hanover Finance in 2011.
[24] Justice Minister Judith Collins was forced to resign and an investigation launched into her role after an email was released alleging that she was directly involved and "gunning" for Adam Feely.
[26][27] In 2011 Hotchin decided to sue the country's biggest newspaper, the New Zealand Herald, for aggravated and punitive damages.