The statutory managers have found a mismatch between the assets and what was in the statements to investors in March last year in the Hubbard Management Funds.
In the sixth report released yesterday by staff of Grant Thornton, since its shock Government appointment as statutory manager on June 20 last year, the managers' said since their reconciliation on March last year, they had found "there were insufficient assets to provide investors the investments noted on their statements".
"Once all adjustments and corrections were processed, the shortfall of assets compared with the investor statements is estimated at about $31 million," the managers said in the report.
Included in the $31 million were also investments which were not allocated to investors and some valuations, in the managers' opinion, were incorrect.
"In our opinion, investors will suffer a considerable loss compared with what was shown on their statements as at March 31, 2010.
"Because there are not enough shares to give investors the investments that were on their statements, we need assistance from the courts to determine the entitlement of investors to the assets of Hubbard Management Funds," they said.
Hubbard Management Funds is an investment management business operated by Allan Hubbard, who along with his wife, numerous trusts and three other companies are all under statutory management.
Statutory managers initially had Hubbard Management Funds valued at $82 million, based on documentation to hand, in March 2010; then in October wiped $19 million off the value ($13 million investment shortfall and $6 million cash) and yesterday said at January this year the funds' value was $48.75 million.
The managers said yesterday that some shares recorded as belonging to Hubbard Management Funds are subject to possible claims from third parties as "shares have been pledged as security to financiers for borrowings made by Mr Hubbard or parties related to him".
The managers are going to the High Court to determine share entitlement to investors and how they should be distributed "given the shortage of investments".
The legal work and submission process was expected to take several months and "the earliest any form of distribution will occur will be in 2012".
The statutory managers already have a High Court order to allow them to actively manage the fund, which included sales of shares in Pike River Coal, New Zealand Oil & Gas and Olympus Pacific, and a $1 million reinvestment back into the Mercer Group under contractual commitments.
At the request of shareholders, the Hubbard Management Fund report has been separated from that of Aorangi Securities, which is scheduled for release later this week.
The managers' fifth report in late November noted "tardy" interest payments by Aorangi Securities' borrowers were continuing to slow statutory managers' progress, with a total $5 million still outstanding at the time.
Aorangi investments included 31 mortgage loans valued last August at $59 million, $47 million in 12 farm loans, two commercial property investments and the Southbury Group and a Te Tua Charitable Trust loan of $24 million.
