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NZ Shareholders Assn wary CBL restructure may undermine investor protections

Monday 11th June 2018

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The New Zealand Shareholders Association wants to see the fine print of a restructuring plan put forward by CBL Corp directors Peter Harris and Alistair Hutchison, and is wary such a proposal could jeopardise legal remedies available in a liquidation.

NZSA chief executive Michael Midgley said in a statement it was hard to establish whether the plan was achievable and appeared to relate only to the New Zealand unit of a much larger corporate entity. A High Court liquidation hearing was rescheduled from last week to let CBL stakeholders consider the available options for the insurer.

"We need to see whether this is a viable proposition which would produce a meaningful outcome for the hundreds of investors affected," Midgley said. "We are concerned that any proposal may impact on the legal remedies available via liquidation, which, in the absence of any concrete proposals, remains our preferred outcome."

Harris and Hutchison have proposed an initial restructuring plan that has been circulated to voluntary administrators KordaMentha with the objective that all CBL Corp creditors get paid in full, NZ insurance policyholders all get paid, and shareholders retain shares in the future business to give them some future value to their shares. The end result would mean the two New Zealand entities would avoid liquidation.

Midgely said the global scale of the business and apparently narrow terms for restructuring made it unclear how much value could be recovered.

"That broader business is spread across the world where various countries have different regulators involved," he said. "This places formidable obstacles and costs in the way of recovery."

CBL appointed voluntary administrators in March after the Reserve Bank sought an interim liquidation of the New Zealand supervised arm and the Central Bank of Ireland made similar moves against CBL's European division.

The Auckland-based insurer had its stock suspended from the NZX on Feb. 8 amid concerns from NZX Regulation about the information it had given the market, following engagement between it, CBL, the Financial Markets Authority, the Reserve Bank, and a number of overseas regulators with prudential oversight of CBL’s international insurance business. On Feb. 20, CBL Insurance told the Reserve Bank it was continuing to operate despite being below the minimum regulatory solvency level.

(BusinessDesk)

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