Court action will delay and may stop payouts to investors in Aorangi Securities, a company associated with the late Alan Hubbard and his wife Jean.
Statutory managers of Aorangi, Grant Thornton, said Mrs Hubbard was disputing the beneficial ownership by Aorangi of $60 million worth of assets and they might now be unable to return almost 100 cents in the dollar to investors.
The court case to confirm that $60 million of assets belonged to Aorangi and not the Hubbards had a provisional hearing date of October 29, in Timaru. If that date was unavailable, the hearing would probably be next year.
"The challenge of ownership of the $60 million of assets submitted to the court means the possibility of a significant loss to investors rather than closer to 100 cents in the dollar if the $60 million of assets were to be available for distribution to Aorangi investors.
"It is our view the Hubbards did not dispute the fact that these assets belonged to Aorangi. Our reason for seeking a court declaration is to confirm that the correct action was being taken," Grant Thornton said in its managers report released yesterday.
The assets in question were transferred to Aorangi by Mr and Mrs Hubbard. They then attempted to transfer those same assets to several trusts.
That was unconventional and the legal aspects of the transfer were incomplete in most cases, the managers said.
"Importantly, Mr and Mrs Hubbard indicated that their personal interests in Aorangi would rank behind the interests of the investors in Aorangi."
The unwinding of those subsequent transactions back to the Hubbards was a deliberate and considered act because, on the analysis of the statutory managers, the legal processes in the original transactions were ineffective and invalid, Grant Thornton said.
Sufficient funds were on hand to make a further 3c capital payment to investors on July 11, bringing the total repayment to investors to 15c in the dollar.
Mrs Hubbard's legal representatives had indicated they might bring a claim to have certain funds from the "introduced assets" released to cover Mrs Hubbard's legal costs.
Also, the statutory managers reported there was progress recovering other third party loans valued at around $39 million. Recoveries depended on market conditions and in several instances on the outcome of legal proceedings.
Among third party loans in the recovery process was a large debt secured over two dairy farms in South Otago being negotiated in conjunction with monitoring farm performance and continuing legal action regarding a family dispute.
A substantial dairy operation in South Otago was placed in receivership last year. The freeholding of the land had been completed and the receivers were exploring sub-division options in conjugation with the potential sale.
A Bay of Plenty property development company called Woodbury Rise Ltd had been liquidated and an interim dividend would be paid soon.
The statutory managers had applied to liquidate a debtor company, Emerald Shores Ltd, which owned Aorangi more than $2.5 million.
So far, administration costs of Aorangi, including payment of fees and disbursements to the end of May, were $4.8 million, with Grant Thornton receiving $2.6 million, legal costs of $1.4 million, third party disbursements of $187,000 and GST of $617,000.
