Hubbard Management Funds investors should start to get their capital back early next year, with 2007 believed to be the last time the fund was solvent.
On Tuesday the High Court released its final decision on how returns to Hubbard Management Funds (HMF) investors will be calculated, assuming the decision is not appealed. The appeal period expires on January 23.
The investment was placed into statutory management along with Allan and Jean Hubbard on June 20, 2010. Grant Thornton was appointed to manage it.
Justice Chisholm concluded, based on evidence from the statutory managers, that March 31, 2007, represented the time where "HMF held sufficient assets to meet all the obligations expressed on the investor statements. After this point, the statements cannot be reconciled against the actual position of HMF. On a high level analysis the fund was solvent at that time even if individual statements might not have been completely accurate. This starting point is supported by counsel."
HMF owes 300 investors $82million but is said to be worth only $41m.
A statement yesterday from the statutory managers said HMF will be effectively split into two pools: The ‘capital pool', the amount required to repay all investors their original money invested to the extent that they have not already made withdrawals from HMF.
"As directed by the court, capital gains, interest and dividends that were reported on investor statements will not be considered as part of the capital pool.
"The ‘surplus pool' is the amount available from realisations of assets after paying all capital amounts due."
The earlier interim distribution approved by the court in June 2012, meant some investors had received more than the original capital they had invested in HMF.
The courts' "claw back" of these overpayments which resulted from the June 2012 order has now been removed as the court found it would be uneconomic to pursue.
The statutory managers had initially said $3m had been overpaid but this had been revised back to $680,000.
The capital pool payments will be made first, starting early next year and expected to take two years.
"The sales process will take a considerable period of time to complete."
Investors' entitlements would be finalised at the end of next week.
"There will be some investors who have made more withdrawals from HMF than their deposits. These investors will not receive any further capital payments.
"Under the court approved formula, some investors may not receive any payment from the surplus pool.
"Should an appeal be lodged, all distributions will be delayed."
- The Timaru Herald