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CBL watershed meeting pushed out to November on delay in Reserve Bank liquidation hearing

Wednesday 8th August 2018

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CBL Corp's creditors will have to wait until November to hear again from the company's voluntary administrators after they were granted a further extension for the watershed meetings by the High Court.

Auckland-based insurer CBL appointed KordaMentha voluntary administrators on March 2 after the Reserve Bank sought an interim liquidation of its New Zealand supervised arm and the Central Bank of Ireland made a similar move against its European division.

That month, the court extended the date for the watershed meeting, normally held within 25 working days of the appointment of administrators, to May, by which time KordaMentha recommended the company be put into liquidation. However, that meeting was adjourned when it became clear there would be a voting stalemate on whether to put the company into liquidation or hand control back to its directors, and rescheduled until July 2.

In June, the administrators again got agreement from the High Court to delay the meeting, then until Aug. 17. Today, the administrators said the court has allowed another delay to the meeting until Nov. 17. 

During this time, CBL Insurance - the New Zealand-based subsidiary - has been placed in interim liquidation, and is being investigated by the Serious Fraud Office, the Reserve Bank and the Financial Markets Authority.

The Auckland High Court had set aside three days beginning July 30 to hear the Reserve Bank’s application to liquidate CBL Insurance, with the central bank alleging that CBL Insurance breached solvency margins and statutory directions. However, the court ordered that hearing be vacated on July 27, and a new date has not yet been set.

"The administrators’ previous extension applications had aligned the dates of the watershed meetings with the expected resolution of the status of one of CBL’s largest subsidiaries, CBL Insurance," KordaMentha said. "There are extensive confidentiality orders in place in respect of the liquidation application, which limits the information the administrators can provide."

KordaMentha's Neale Jackson said the outcome for CBL Insurance is "a key consideration in assessing the potential options for the group, including the restructuring plan that is being proposed by two of CBL’s directors. The position of CBL Insurance also impacts on CBL Insurance Europe, another of CBL Corporation’s subsidiaries, as is explained in our watershed report.”

“The late adjournment of the CBL Insurance liquidation hearing has necessitated extending the watershed meetings to allow time to consider the impact that the deferral has on the options available to the companies we control," Jackson said. "One of the options we are considering is whether to proceed with resolving the position of the companies that are in administration despite not knowing the outcome for CBL Insurance, but at this stage that is not our preferred option."


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