Statutory manager wraps up Hubbard's Aorangi with 99% recovery

Monday 22nd September 2014

The statutory managers of Aorangi Securities, one of the failed vehicles in the stable formerly run by Timaru businessman Allan Hubbard, has been wrapped up with just above 99 percent recovered for the 400 or so investors.

About $101.2 million, or 99.037 cents in the dollar, has been repaid to Aorangi investors, the Grant Thornton statutory managers said in a statement, concluding their four-year administration of the fund. Of the $2.6 million in funds on hand at the time of the appointment, and $109.7 million generated from asset sales, interest and a settlement with Jean Hubbard, the widow and estate executor of Allan Hubbard, some $5.1 million was paid out in fees to Grant Thornton, $3.8 million in legal costs, $547,000 in other third party disbursements, and $1.4 million in GST.

"While we have signalled for some time that investors in Aorangi were likely to receive most, if not all, of their capital back, it is never-the-less pleasing to have reached this conclusion," the managers said. "Our approach through the statutory management was to return funds to investors as quickly as possible without undertaking asset fire sales."

Former Commerce Minister Simon Power appointed the statutory managers of various Hubbard entities, though controversially left out Allan Hubbard's primary entity, South Canterbury Finance.

SCF ultimately cost the taxpayer an upfront bill of $1.7 billion when it failed and called on a government deposit guarantee scheme created to protect investors during a spate of finance company collapses in the late 2000s. Former directors and an executive of SCF stood trial for an alleged fraud at the lender, and are awaiting a verdict.

Hubbard died in a car crash in 2011 facing fraud charges relating to his management of Aorangi.

The statutory managers also wrapped up their administration of Te Tua and other charitable trusts, of which they were paid $910,000, and incurred legal fees of $682,000, $22,000 in other third party distributions, and GST of $238,000.

The managers said regular reviews by the Ministry of Business, Innovation and Employment of the costs didn't raise any issues.

Over the course of the four-year administration, the managers sold 30 assets, made up of farms and commercial property, worth some $420 million, that Aorangi had a stake in, improved processes at more than 50 entities to lift the fund's return, recovered $24.3 million in loan repayments, realised more than $17 million of Te Tua loans, and negotiated the settlement with Jean Hubbard in what was at times an acrimonious battle over $60 million of disputed assets.

The administration of the Hubbard Management Fund is still ongoing, and had repaid 50 cents in the dollar to about two-thirds of the 300 investors in the fund who will get all of their capital returned, according to its last report in August. The manager will decide how to distribute any surplus once the initial pool is settled.

BusinessDesk.co.nz

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