Herbert Insurance liquidators probe indicates "possible breaches"

Wednesday 11th April 2012

The liquidators for Herbert Insurance Group, the boutique insurer under scrutiny by the Serious Fraud Office, have found the firm may have breached legislation, but it’s waiting on the white-collar crime investigator before taking any action.

In his second report, joint liquidator Aaron Walsh of Corporate Finance said a number of potentially voidable transactions and disposition of assets “by way of unusual fund transfers” had been identified.

“In the absence of funding, the liquidators do not foresee any merit in pursuing actions which will not result in a monetary benefit to the company’s creditors,” Walsh said in the report. “Our investigations also indicated breaches of legislation, but pending a decision on action by the SFO, the liquidators have deferred progressing action in relation to these suspected breaches.”

Last year, receivers for Herbert Insurance and its companion entity Herbert Securities sold its customer base of some 4,500 people to Aon New Zealand, though there will likely be a shortfall to secured creditor ASB Bank, which is owed $780,000. The value of the transaction is expected to be settled this month, and no consideration has yet been paid.

The SFO received complaints about a shortfall in Herbert Insurance’s broking client account, sparking the investigation and liquidation of the entities. The SFO wasn’t immediately available for comment.

The liquidators have also launched their own investigation into the affairs of Herbert Insurance as to whether there have been any breaches of the law or if there are any avenues for recovery available, the report said.

Walsh said the first report from receivers Korda Mentha indicated there won’t be enough recoveries to meet claims of preferential or unsecured creditors. Liquidators act for unsecured creditors when a business is wound up.

BusinessDesk.co.nz

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