New Zealand-based CBL Corporation has been placed into liquidation by the High Court, as directors of the failed insurer withdrew their opposition to liquidate the group.
CBL Corporation directors Alistair Hutchison and Peter Harris said they decided not to oppose the liquidation application after failing to obtain the agreement of the company’s bankers to the terms of a proposed Deed of Company Arrangement (DOCA).
“Unfortunately, even after 15 months, the banks have not seen any material money from the sales of CBLC assets, most of which are still in process,” Harris said, “so the very large bank debt has not reduced.
“Although Alistair and I consider that we have the creditors by numbers to support the DOCA, we don’t have the creditors by value required without the banks’ agreement,” he said.
Harris said the determination by McGrathNicol and the Reserve Bank of New Zealand (RNBZ) to oppose the proposed CBL Insurance DOCA in November 2018, which would have provided a viable commercial pathway, was a devastating blow. Their actions over the past 15 months require an explanation to New Zealand policyholders and creditors, and to the public, he suggested.
Moreover, Harris said policyholders and creditors of CBL Insurance, and the public, also deserve to be told what McGrathNicol has since done this deal (in January 2019) to pay Elite, one of the major creditors, in full and ostensibly at the PwC recommended and accepted values in the CBL Insurance balance sheet.
“The question is: Why was it done in secret without notifying all creditors, and why should the largest CBLI creditor get paid in full when not one other creditor or New Zealand policyholder claim gets paid at all?” Harris said. “Is it because they don’t want to admit that the CBLI values were right after all? They knew Elite would accept the CBLI liability numbers recommended by PwC, so why did they use the higher liability values to try and justify liquidation in November?
“And why oppose the DOCA proposal in November that would have benefitted all creditors and policyholders of CBLI, with benefits flowing through to the parent CBLC and its creditors? This would have paid money to the banks and formed the basis of a viable DOCA for CBLC – potentially avoiding liquidation at this week’s hearing,” he added.
Meanwhile, voluntary administrator KordaMentha advised that the period of administration has now ended, and that Brendon Gibson and Neale Jackson were appointed liquidators.
The liquidators said they applied to the High Court to approve them providing statutory reports and other documents to shareholders and creditors by posting them on the KordaMentha website. When the High Court rules on that application, the liquidators will post an update on the NZX market announcements platform.
The liquidators remind shareholders that while CBL is in liquidation, it is only permissible to transfer shares in the company with a court order.
CBL Insurance was placed into liquidation by Auckland High Court in November.
