Investors owed tens of millions of dollars from Allan Hubbard's Aorangi Investments Ltd will have to await the outcome of a minefield of litigation over asset ownership before more payments are made.
Key to any further payments to investors is a High Court hearing, likely next year, to determine claims on who owns Aorangi assets worth about $20 million, statutory managers said yesterday.
"If we are unsuccessful in this claim it will have a serious adverse effect on the ultimate recovery to investors," accountancy firm Grant Thornton said.
Before the death of South Canterbury Finance founder Mr Hubbard last September in a North Otago road accident, he faced 50 fraud charges laid by the Serious Fraud Office over Aorangi Securities and Hubbard Management Fund.
Earlier this week, statutory managers of both investments, Grant Thornton, reported they last week paid $9 million of a total $12 million available to investors in the Hubbard Management Fund, or 13.4c in the dollar, also cautioning it might take years for final payments to be made.
Aorangi investors have already been paid $11.5 million; or 12c in the dollar, and yesterday Grant Thornton released its 10th report on Aorangi Securities.
At present, there are about 34 separate entities involved with the Aorangi assets with an estimated value of about $60 million; having once been valued by Mr Hubbard at $96 million, before he scaled some values down.
"The manner of the introduction of the assets by Mr and Mrs [Jean] Hubbard into Aorangi was unconventional and the transfer of legal title in the assets to Aorangi was not completed in most cases," the firm's report said.
Grant Thornton has filed proceedings in the High Court at Timaru, seeking orders on whether the assets introduced or pledged by the Hubbards to Aorangi can be declared to be legally owned by Aorangi.
"The successful outcome or otherwise of these proceedings will largely determine how much the investors of Aorangi ultimately recover," Grant Thornton said. It was "unlikely" the High Court would hear proceedings this year, the firm said.
Total realisations to date total about $36 million, with $20 million of that held pending the determination of asset ownership ($10 million of which is a secured loan). Of the total, $11.5 million was used for the investor payments and $4.1 million in management fees.
Aorangi had a $23 million investment in the Te Tua Charitable Trust, of which $4.9 million has been collected from its loan book and all its properties have been sold. An interest-free loan of $1.2 million to a farming family is due for settlement.
The Te Tua loan balance at the end of February was $19.8 million, which includes $2.47 in loans which are unable to be repaid.
As an example of contested asset ownership, a party "claiming" to be an Aorangi investor alleges funds of $5.6 million were being held by Aorangi, but while records show Mr Hubbard transferred ownership elsewhere, the investor told Grant Thornton he did not authorise that transfer.
As with the widespread rural loans made by South Canterbury Finance around the South Island, Aorangi also held rural assets across the southern provinces.
Otago features in the property asset ownership problem, there being a substantial South Otago dairy operation put in receivership in April last year which might yet be subdivided by Grant Thornton.
Two other South Otago dairy farms are the focus of a family dispute with a caveat in place and are headed to court this year. A settlement there could result in "significant realisation of funds" for Aorangi.
There was also a block of Central Otago properties listed for sale.
