UPDATE: CBL Insurance placed in liquidation
(updates with comment from the Reserve Bank beginning in paragraph five)
By Rebecca Howard
Nov. 12 (BusinessDesk) - CBL Insurance, a subsidiary of CBL Corp, has been placed in liquidation by the Auckland High Court, against the recommendation of the voluntary administrators.
"The administrators had been working to secure a restructuring proposal that could be implemented through a voluntary administration of CBLI, to avoid it being placed into liquidation," Brendon Gibson and Neale Jackson of KordaMentha said in a statement.
"In our view, a restructuring proposal implemented through a voluntary administration offered the potential to deliver a better outcome for CBLI’s creditors and creditors of the wider CBL Group companies. Ultimately, however, two of CBLI’s major creditors did not support voluntary administration, which is their right," Jackson said.
Auckland-based CBL appointed KordaMentha as voluntary administrators in March 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.
The Reserve Bank of New Zealand said it welcomed news that CBLI had been placed into liquidation without the need for a contested hearing.
"Opposition from CBL Insurance's directors and from the shareholder caused significant delay to the full liquidation hearing. Once major creditors of CBL Insurance failed to come forward with support for an alternative restructuring proposal, then the liquidation outcome became inevitable. We are pleased a contested trial was unnecessary," said deputy governor and head of financial stability, Geoff Bascand, in a statement.
According to the RBNZ, the High Court appointed Kare Johnstone and Andrew Grenfell, partners of McGrathNicol, as liquidators of CBLI.
In a media statement, CBL directors Peter Harris and Alistair Hutchinson said they decided to withdraw their opposition to the liquidation when two major creditors agreed to support it.
The directors made significant efforts to guarantee a "fully solvent outcome from CBLI and full payment to its New Zealand creditors and policyholders," they said. Those efforts, however, were "scuttled" by the Reserve Bank, which they said was focused on liquidation.
Watershed meetings to determine the fate of the rest of the group are scheduled to be held no later than Dec 18.
The Reserve Bank has commissioned an independent review of the CBLI case to identify lessons for itself and the insurance regulatory regime. The review is being conducted by John Trowbridge and Mary Scholtens QC and will cover the period from CBLI's licensing in 2013 through to the interim liquidation. Key findings from the independent review will be made public next year.