The New Zealand Herald

CBL Corp voluntary administra­tion

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NZX-listed CBL Corporatio­n has appointed voluntary administra­tors to prevent other regulators from taking action after the Reserve Bank moved to have interim liquidator­s take charge of its subsidiary, CBL Insurance, managing director Peter Harris said.

“That means that everything from here on operates under a protective umbrella of voluntary administra­tion,” Harris told the Herald.

Harris said the administra­tors, from KordaMenth­a, would continue working through a plan to restore “the hole in a balance sheet” caused by increase reserve strengthen­ing required for the company’s French constructi­on business in CBL Insurance’s books.

That plan involved selling off the “run-off book of liabilitie­s”, which Harris said was expected to take weeks rather than months.

“If we can find a party to acquire that liability for a sum of money that will have significan­t upside for CBL Insurance’s regulatory solvency to the extent that it could come out of interim liquidatio­n quite quickly,” Harris said.

Meanwhile, the interim liquidator­s of CBL Insurance say they will continue to operate that business and are assessing its financial position.

McGrathNic­ol’s Kare Johnstone and her colleague Andrew Grenfell were appointed interim liquidator­s of CBL Insurance on Friday by the High Court’s Justice Patricia Courtney.

The applicatio­n for the pair’s appointmen­t came from the Reserve Bank as the insurer’s prudential supervisor and was made without notice.

Justice Courtney ruled “there be no publicatio­n of informatio­n submit- ted to the court in relation to this applicatio­n”, although the facts and terms of the order and names of the interim liquidator­s were allowed to be published.

CBL Insurance, a subsidiary of CBL Corporatio­n, describes itself as “New Zealand’s largest and oldest credit surety and financial risk provider” and operates in 25 countries.

“The business is focused on financial risk products, builders risks, sureties, guarantees and contractor bonds worldwide — in particular in Europe and Scandinavi­a,” the company’s website says.

CBL Insurance on Friday night said the interim liquidator had been appointed pending the outcome of a liquidatio­n applicatio­n in the High Court.

“This appointmen­t is not in respect of CBL Corporatio­n Ltd or any other companies in the group,” CBL Insurance said in a statement.

Johnstone, one of the interim liquidator­s, yesterday told the Herald she was assessing the financial position of the business and would continue to operate it. She could not comment further.

Justice Courtney’s order, according to court documents, enabled the interim liquidator­s to “maintain the assets of the defendant company”, including the ability to take custody and control of assets, seek freezing orders, and take control of all global assets irrespecti­ve of the country in which they were located.

NZX suspended the CBL Corporatio­n stock this month due to concerns the market operator’s regulation team had about whether the company had given complete and true material informatio­n to the market.

Trading in the stock was halted before the suspension, with details eked out over subsequent days that prudential regulators in New Zealand and abroad questioned the adequacy of reserves for its French constructi­on insurance division, prompting a credit rating downgrade and prospectiv­e capital raise.

The company this month said it still expected to report annual earnings today, having issued a profit warning that it posted a loss of between $75 million and $85m in calendar 2017.

CBL Corp last Tuesday said its European subsidiary’s lawyers were opposing an order from the Central Bank of Ireland instructin­g it to stop writing new business immediatel­y.

CBL said its subsidiary CBL Insurance Europe Dac (CBLIE) was continuing to otherwise operate normally and existing policies remained in force. — NZ Herald, BusinessDe­sk

 ?? Picture / AP ?? Warren Buffett didn’t say much the succession plan.
Picture / AP Warren Buffett didn’t say much the succession plan.
 ?? Picture / File ?? Peter Harris said the move was to prevent other regulators taking action.
Picture / File Peter Harris said the move was to prevent other regulators taking action.

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