Tuesday 6th September 2011
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The Registrar of Companies, Neville Harris, will talk to Jean Hubbard and her advisers before making a final decision on the future of her statutory management after Allan Hubbard’s death last weekend.
Harris had been considering whether to release either of the Hubbards from the freezing order as part of the review he commissioned into the progress of the statutory management. Former National Bank head John Anderson and Deloitte insolvency specialist Rod Pardington reported back in July, which was then put to the Hubbards for feedback.
“Mr Hubbard’s death changes the position in a number of respects,” Harris said in a statement. “It will now be necessary to consult with Mrs Hubbard and her advisers before this review can be completed.”
Allan Hubbard died en route to hospital after a car accident in North Otago on Friday, ending an 18-month long saga that began with Commerce Minister Simon Power putting the Hubbards and some of their business interests under statutory management.
The order came after an anonymous complaint was laid with the Securities Commission by an investor claiming they hadn’t seen a prospectus for their investment in Aorangi Securities.
The Hubbards were set to challenge the order in the High Court in Timaru this week, though that hearing has since been adjourned.
Harris said he expects to provide advice to the minister in the next week to 10 days.
“The position of Aorangi Securities. and Hubbard Management Funds is complicated and investors have suffered losses. It is not clear where all of those losses will fall,” he said. “Circumstances have now changed, but under the Corporations (Investigation and Management) Act, the main focus, and my first priority, must be the interests of the investors as creditors.”
Statutory managers Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton expect returns to come slowly for Aorangi Securities investors and expect a $31 million shortfall in the distributions from the Hubbard Managed Funds.
The statutory managers said the total administration of Aorangi, Te Tua Charitable Trust and HMF was $4.9 million, made up of $2.87 million to Grant Thornton, $1.15 million in legal fees, $276,000 in other disbursements and $609,000 in goods and services tax, according to their July report.
Hubbard’s supporters claim the statutory management was the final straw that broke the back of his business empire, with South Canterbury Finance being pushed into receivership in August last year after the lender failed to find new capital.
That failure prompted a $1.6 billion call on the government’s retail deposit guarantee scheme, prompting the Crown to pay out all other creditors to assume control of the failed lender. The net cost of that call has ballooned from the initial $400 million to $500 million cost flagged by Prime Minister John Key.
Last month’s sale of the good loans to Japanese investment bank Nomura Holdings last month was the last of the main assets. The most the receivers have achieved through asset sales is some $421 million if they got them away at book value, on top of the $238.7 million they clawed back from loan repayments.
That leaves the 33% stake in Dairy Holdings and impaired loans worth $256.2 million when they were valued in August last year as the last major South Canterbury assets left.
Since the accident, the Serious Fraud Office has lodged an application to withdraw its criminal prosecution against Allan Hubbard.
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