Court battle may lead to 35c payout

Aorangi Securities investors may see only 35 cents in the dollar if high court action by statutory managers is unsuccessful.

The ownership of ''introduced assets'' to be heard on May 20 in the Timaru High Court, will determine how much investors owed $96 million will recover.

Following their appointment on June 20, 2010 statutory managers began unwinding transfers by the Hubbards of $60m. Now they rely on the court to determine who are the beneficial owners of the $60m.

The 13th report has been sent to investors by statutory managers Richard Simpson, Trevor Thornton and Graeme Carson McGlinn.

Allan Hubbard died in September 2011 in a car crash, now his widow Jean and estate are arguing they were the owners of the $60m.

''The statutory managers believe Aorangi investors could get almost all of their investment capital back if the managers are successful in the court hearing. If not, then Aorangi investors will only get around 35 cents in the dollar, including the 15 cents already paid out which is just $34 million in total,'' the report said.

''During the period from April 2009 to March 2010, Mr and Mrs Hubbard introduced assets into Aorangi. They did so in their personal capacities, as trustees of various trusts and as company shareholders and directors. Those assets were in the form of shares and loans in farm owning companies, partnerships and commercial entities. There are some 34 separate entities involved with the assets having an estimated current value of approximately $60 million.

''We are now at the point where we have completed a full overview of the history of Aorangi and of its failure. As this matter is before the court we are unable to provide investors with much of the detail of our case. However, our legal advisers believe our case is strong. We have provided the high court with affidavits which outline Aorangi's history and our conclusions, based on the evidence we have found, as to why assets were introduced in 2009 and 2010.''

Grant Thornton has also asked the court to rule that the Hubbards are only paid for the assets they introduced after the claims of investors have been met.

''We have made progress in cashing up many of these investments and await the outcome of the court hearing but there are still some loans remaining to secure on behalf of investors, including loans to Te Tua Charitable Trust and other South Island farming interests, and $61.5m in capital from the introduced assets. Negotiations or court actions to recover the loans are well advanced.''

The total cost of the administration including legal fees by statutory management of Aorangi has been $7.1m so far.

The Timaru Herald