Investors in Aorangi Securities will receive another payout tomorrow of 5c in the dollar after the statutory managers refinanced a $5 million loan.
Aorangi is one of the companies which was controlled by the late Timaru businessman Allan Hubbard, who died in a car crash north of Oamaru last month. His wife, Jean, was injured but has returned home from hospital.
Statutory manager Trevor Thornton said in a letter to investors he and the other managers were working through the effect of Mr Hubbard's death on the statutory management process with Government agencies, the Hubbard family and their advisers.
"From our previous reports, you will be aware that there is a significant group of assets - which the Hubbards held personally - which they stated that they intended to introduce into Aorangi Securities for the benefit of investors.
"The availability of those assets to Aorangi remains a significant factor in the ultimate return to investors. We have been continuing our work to determine the availability of those assets, as well as managing them and realising them in the meantime as appropriate."
Last month, action was taken to control a property development where refinancing had not taken place, Mr Thornton said.
Liquidators were appointed to the company and they would now control the sale price of the properties. Aorangi had a $750,000 exposure to the borrower with Mr Hubbard owed a further $2.5 million.
Court action was being taken to place into liquidation a related company with exposure of $2.5 million to Aorangi and $3.8 million to Mr Hubbard.
The process was required because of the lack of valid security to Aorangi, Mr Thornton said.
The accounting methods used by Mr Hubbard have come under scrutiny in the latest report from Hubbard Management Funds.
In a wider report, Mr Thornton said volatility on the world's sharemarkets had seen the value of Hubbard Management Funds drop to $46 million in September from $49.3 million in May and $47.8 million when the statutory managers were appointed in June last year.
The volatility of the fund was expected to continue for some time given the uncertainty affecting the global economy and financial markets and that could result in further losses, Mr Thornton said.
The good news for investors was that significant progress had been made towards filing the required documents for the court hearing which would ultimately determine the distribution of the Hubbard funds.
Expert actuaries had been hired to advise on the appropriate approach to allocate funds equitably.
Part of the advice would be on the allocation of shortfalls in the funds proportionally to investors based on the securities recorded in their individual portfolios on June 20 last year, he said.
"Some of the shortfalls will have been reduced while others may have been made worse.
Generally, it appears Mr Hubbard made purchases and sales in the period April 1 to about June 30 each year to correct issues he found in the statements."
In addition, the value of the surplus shares held should be used to offset any shortfalls in the cash holdings, he said.
The shortfalls included listed stock market shares, and incorporated shares in Hubbard entities such as Scales, Southbury and South Canterbury Finance.
It the past, it seemed Mr Hubbard used the cash labelled on statements as "cash on hand" or "uninvested funds" to fund other share purchases.
The managers were told Mr Hubbard had a view that money in the bank was not working so he invested it.
As a result, it could be argued that the surplus shares were really part of uninvested cash, so the actuaries had advised the managers to regard surplus shares as part of cash, he said.
The restated investor balances, after those calculations, would determine each investor's share in the assets remaining under the proposal.
The advice provided was that, from the date of the statutory management, the assets should be treated as a pool. That advice would be recommended to the court.
