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In the High Court at Timaru, the elderly couple are arguing that the law used to place them in statutory management last June does not apply to human beings, the process pursued was flawed and the information used was unsound and inadequate.
They today filed judicial review proceedings at the court challenging the decision to place them into statutory management and seeking orders that they be removed from statutory management.
The proceedings seek to remove them from being personally subjected to statutory management.
The Hubbards, their companies Aorangi Securities and Hubbard Management Funds, and seven charitable trusts were placed in statutory management by the Government on June 20 last year.
Mr Hubbard was the president for life of Timaru finance company South Canterbury Finance which later failed, triggering a $1.7 billion government bailout.
The couple live modestly in Timaru where they have widespread community support. They have been the subject of a book and their supporters run a facebook page.
In March, Prime Minister John Key told a public meeting in Timaru that "I like Allan Hubbard", and the last thing the Government wanted to do was buy a finance company but he said Mr Hubbard had provided a lot of loans to people who could not pay them back.
A statement from the Hubbards today said that since they were placed into statutory management they had sought to co-operate with the statutory managers and the Government so they could be removed from statutory management.
They regretted that these discussions had not been productive and felt that, after almost 11 months of being subjected to statutory management, they were left with few options other than filing judicial review proceedings.
The Hubbards remained hopeful that a negotiated outcome could be reached and they would continue to co-operate with the Government and the statutory managers to have them removed from statutory management.
Statutory management is a remedy of last resort used when the affairs of a corporation cannot be adequately dealt with by any other insolvency regime. It enables groups of companies to be dealt with as a whole and can be used as an emergency measure.
The Hubbards are arguing that the relevant legislation cannot be applied to human beings, as opposed to corporate entities or trusts.
A sixth statutory managers report in March said it could take up to four years for the loans and investments of Aorangi Securities Ltd to be realised, due to many non performing loans and investments requiring intensive management.