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Hubbard statutory management hits courtroom speed bumps

Tuesday 2nd October 2012

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The statutory management for the late Allan Hubbard's frozen investment vehicles is set to hit a go-slow period as the managers charged with winding up the entities prepare for court action on several fronts.

Hubbard's widow and the executor of his estate, Jean Hubbard, denies $60 million of assets were transferred into Aorangi Securities and is seeking to keep them, with a five-day hearing set down for the end of the month, according to the latest report into the Aorangi statutory management.

"If we are unsuccessful in these proceedings, this will have a severe impact on returns to Aorangi investors," the statutory managers at accounting firm Grant Thornton said.

Simultaneously, the managers for the Hubbard Managed Funds entity, also under statutory management, face claims from the Hubbard estate over shares in Mercer Group and South American Ferro Metals, and from ASB Bank relating to security it held over shares in Scales Corp.

The statutory managers are also trying to avoid an appeal of a High Court ruling on the distribution of the remaining funds as it faces a likely shortfall between the total assets of HMF and the total obligations on investor statements, they said.

As at Aug. 31, HMF's portfolio was valued at $46.64 million before allowances and a $9 million distribution.

Former Commerce Minister Simon Power appointed Grant Thornton New Zealand's Trevor Thornton, Richard Simpson and Graeme McGlinn as statutory managers of the Hubbards and various entities in mid-2010. The appointment controversially left out South Canterbury Finance, which ultimately cost the taxpayer an upfront bill of $1.7 billion when it failed and called on the government deposit guarantee.

Across the entire statutory management, the managers have reaped fees and disbursements of some $5.8 million, and racked up legal fees of $3.4 million.

In December the statutory managers sought an independent review of their administration by the then-Ministry of Economic Development, which is now under the Ministry of Business, Innovation and Employment umbrella, to allay fears they were charging too much.

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