UPDATE: CBL administrators recommend liquidation

UPDATE: CBL administrators recommend liquidation

(recasts lede and adds detail throughout after the voluntary administrators recommend the company be put into liquidation)

By Sophie Boot

May 11 (BusinessDesk) - CBL Corp's voluntary administrators have recommended the company be put into liquidation, to enable the liquidator to further investigate the events leading up to the group’s various insolvency procedures.

Auckland-based CBL appointed KordaMentha voluntary administrators on March 2 after the Reserve Bank sought an interim liquidation of its New Zealand supervised arm and the Central Bank of Ireland made a similar move against the insurer's European division.

Earlier today, the administrators said a creditors' watershed meeting will be held next week. The second meeting of creditors gives them the choice to resolve that a deed of company arrangement be executed, resolve that the administration should end, or appoint liquidators. In March, the Auckland High Court granted the administrators orders extending the date by which it must call the watershed meeting, normally held within 25 working days of the appointment of administrators, until today.

The administrators said that some of CBL's directors are working on a proposal to restructure the group, and it believes that CBL's direct subsidiaries should remain in administration so the best return can be gained, and the option of restructuring can be put to creditors.

"It is too early to assess the return to creditors or shareholders," the administrators said. "This will be dependent on any restructuring proposal, including that currently being worked on by certain of the group’s directors; the sale processes currently underway for the group’s business units; the outcomes of the CBLI and CBLIE insolvency processes; any potential legal actions that may be available."

CBL had its stock suspended from the NZX on Feb. 8 amid concerns from NZX Regulation about the information it had given the market, following engagement between it, CBL, the Financial Markets Authority, the Reserve Bank, and a number of overseas regulators with prudential oversight of CBL’s international insurance business. On Feb. 20, CBL Insurance told the Reserve Bank it was continuing to operate despite being below the minimum regulatory solvency level.

(BusinessDesk)

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