Big date looms for Hubbard investors

A high Court case in May will determine whether more than 230 investors or the estate of the late financier Allan Hubbard will get access to $60 million of disputed funds from private investment company Aorangi Securities, run by Mr Hubbard and his wife Jean.

If the High Court case in Timaru, starting on May 20, finds in favour of the investors, they could get almost dollar for dollar back on their investments, but if not, they will get only about 35c in the dollar, which includes 15c in the dollar already paid out - a potential total of just $34 million.

The Aorangi fund was estimated to be worth $96 million, and, along with a separately disputed Hubbard Management Fund, were outside the Government's guarantee scheme which bailed out investors in the $1.75 billion collapse of Mr Hubbard's South Canterbury Finance.

It has been reported Mrs Hubbard was disputing the $60 million in that the assets in question were never transferred to Aorangi's ownership, so were therefore due to Mr Hubbard's estate.

Three week's ago, a report by former National Bank chairman John Anderson concluded Mr Hubbard had misled investors in his tangled affairs, The New Zealand Herald reported.

Mr Hubbard died in a car accident in September 2011.

Aorangi statutory manager Grant Thornton said yesterday in its 13th report to investors its legal advisers believed its ''case is strong''; to successfully lay claim to the disputed assets on behalf of investors.

''We have provided the High Court with affidavits which outline Aorangi's history and our conclusions, based on the evidence we have found, as to why assets were introduced in 2009 and 2010,'' the report said.

At the heart of the Aorangi case are multiple ''introduced assets'', with 34 separate entities involved, which have an estimated value of about $60 million.

Grant Thornton is under increasing pressure to get funds released, with complaints lodged by investors with the Minister of Commerce and Attorney-general in November.

Grant Thornton said that from April 2009 to March 2010, the Hubbards introduced assets into Aorangi; in their personal capacities, as trustees of various trusts, and as company shareholders and directors.

''Those assets were in the form of shares and loans in farm-owning companies, partnerships and commercial entities,'' the report said.

Grant Thornton was optimistic investors ''could receive most of their capital back subject to the May 20 [High] Court decision going the way of investors''. To gain further protection for Aorangi investors, Grant Thornton had also asked the High Court to determine a ruling that the Hubbards were only paid for the assets they introduced, after the claims of investors had been met.

The manager had cashed up many investments, but there were still some loans remaining to secure on behalf of investors, including loans to Te Tua Charitable Trust and other South Island farming interests''Negotiations or court actions to recover the loans are well advanced,'' Grant Thornton said.

A fortnight ago about 300 investors in the separate, disputed Hubbard Management Fund (HMF), which holds about $40 million in assets, were told by Grant Thornton they would this month begin receiving some payments. The HMF was once valued by Mr Hubbard at $83 million, and now has had its fair value of identified assets set at about $40 million by Grant Thornton, Following a request by the ODT, Grant Thornton said late last week that the last valuation undertaken, at August 31 last year, valued the HMF portfolio, before allowances and the interim distribution, at $46.6 million.

Investor payments so far totalled about $12 million, equating to about 13.4c in the dollar, but some HMF investors might not be entitled to further payments.

About 70 investors were unlikely to get any further payment as the interim distribution they received in March 2012 had exceeded their entitlement under the final distribution order calculation, which came from a High Court hearing. But neither would they face a claw-back of those funds released.

Grant Thornton said the lack of any legal appeal, which lapsed as of January 23, had cleared the way for distributions to HMF investors.

simon.hartley@odt.co.nz