Investors in the disputed Hubbard Management Fund (HMF), once
valued at more than $80 million, will not have any earlier
payments ''clawed back'' by court order, according to
statutory managers Grant Thornton.
Grant Thornton, coming under increasing pressure from
disgruntled investors in HMF and separate claims on Aorangi
Securities Ltd, yesterday announced a High Court-backed HMF
payment scheme of an initial ''capital pool'' for payments,
followed by a ''surplus pool'' payout.
''Payments will be made from the realisation of assets and
will be made proportionately over time. We will need to
retain sufficient funds to honour HMF's contractual
commitments to private equity funds and pay costs,'' Grant
Thornton said yesterday.
HMF, once valued by millionaire financier Allan Hubbard at
$83 million, has had its fair value of identified assets set
at about $40 million by Grant Thornton, which rejects
investors' claims it is to blame for the decline in value.
HMF's payments to shareholders are likely to take years to
complete, with the potential for court appeals, claims by the
Hubbard family, and tension between the Investor Liaison
Group for Hubbard Management Funds and Grant Thornton.
Grant Thornton noted yesterday that should any appeal be
lodged by January 23, all distributions would be delayed
until the appeal was resolved, which could take all of 2013.
In early April this year, HMF investors received their first
payment since the fund was frozen in 2010 just weeks before
South Canterbury Finance began unravelling. The latter
triggered a government bail-out of $1.75 billion.
The funds in HMF and Aorangi Securities were not covered by
the government guarantee.
The investor payments since April totalled $12 million and
equated to 13.4c in the dollar for the HMF investors. The HMF
portfolio was once valued in investor statements at $89
million, before it was placed in statutory management.
Grant Thornton said the earlier interim distribution this
year, previously approved by the High Court, meant some
investors had received more than the original capital they
had invested in HMF.
''The courts' clawback of these overpayments which resulted
from the June 2012 order has now been removed. The statutory
managers will no longer be required to seek repayments from
investors previously impacted,'' Grant Thornton said.
The managers said it could take ''at least two years'' to
repay the first capital pool, followed by the surplus pool,
as many investments were illiquid or in long-term private
''We will not sell assets on a fire sale basis,'' Grant
Early last month, Grant Thornton, in response to mounting
investor criticism, said the fair value of the identified HMF
assets was $60 million, not the $83 million in Mr Hubbard's
statements to investors, less further costs (see factbox at
left), leaving about $40 million in assets.
Beginning of the end
• June 2010: Government puts South Canterbury founder Allan
Hubbard, his wife, Jean, Hubbard Management Funds, Aorangi
Securities and seven trusts in statutory management.
• August 2010: SCF into receivership; triggers government
settlement of $1.75 billion owed to 35,000 investors and
lenders under retail deposit guarantee scheme. Hubbard
Management Funds (HMF) and Aorangi Securities not under
• HMF investor statements overstated by Allan Hubbard: $23
million ($60 million stated as $83 million)
• Further cash shortage identified: $6.5 million
• Financiers' claims, and the Hubbard family: $7
• Market movements and costs: $4 million
Total reduction in HMF book value $40.5 million
SOURCE: Statutory managers Grant