Investors in one of Allan Hubbard's frozen funds have received a $9 million payout but will have to wait years to see how much of their total investment will be recouped.
Accountancy firm Grant Thornton was appointed to manage the Hubbard Management Fund in June 2010 after the assets of Allan and Jean Hubbard, their investment companies and several charitable trusts were placed into statutory management. Allan Hubbard died last year after he and his wife were involved in a car accident.
Grant Thornton's Graeme McGlinn yesterday said it had reached an interim agreement with the High Court to pay out $12 million, of which $9 million was paid to investors on Friday.
It is the first payment made to investors in the fund.
McGlinn said the Grant Thornton managers were still waiting for a court decision on the fairest way to calculate how much money should be allocated to each investor but had reached an agreement with the court allowing it to make the interim payment based on the amount of shares allocated to investors in their statements.
A further $3 million is expected to be paid out after the court hearing which is set down for May 21 and 22.
The money has come from the sale of shares but McGlinn warned investors would have a long wait for their final payment.
"Once the court decision is known, the statutory managers can sell down the balance of the portfolio in an orderly way for investors and distribute it in accordance with the court's guidance. This will happen over several years as many of the investments are long term."
According to investor statements the fund should have been worth $89 million as of March 31, 2010, but discrepancies and a decline in the sharemarkets had whittled the value of the fund down to just $43 million, the managers said.
Hundreds of investors in the fund have received money back but 10 per cent could not be paid because they either had cash recorded on their investment statement or invested in the fund after March 31, 2010 and had no shares allocated to them.
Investor statements showed the total amount of cash held should have been $6.1 million, before adjustments and $12.06 million after adjustments.
But the amount of cash in the fund's bank account was just $234,000 at March 31, 2010 and by the time Grant Thornton took over, three months later, it was in overdraft.
The managers want to use the unallocated shares held by the fund to help make up the cash shortfall but McGlinn said if its proposal was not approved by the court, investors with a cash component included in their statements may not receive any payment for that component of their investment.
The fund also faces several legal challenges which could affect how much money investors end up with.
The managers said there were claims against the fund's investments by financiers alleging the shares had been given as security for loans provided to Allan Hubbard.
The case concerns $2.1 million worth of investments and is set down for an April 30 court date.
The Hubbard Management Fund also faces a legal challenge from Allan Hubbard's family who are contesting the transfer of some shares.
* About 400 investors.
* Valued at $43 million.
* $9 million first payment.