Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Bridgecorp insurance stoush heading to Supreme Court

Former Bridgecorp chairman Bruce Davidson. Photo / NZPA
Former Bridgecorp chairman Bruce Davidson. Photo / NZPA

The receivers of failed finance company Bridgecorp have been given leave to appeal to the Supreme Court in a stoush over an insurance policy worth up $20 million.

Before the criminal trial of the Bridgecorp bosses - which wrapped up last year - directors Peter Steigrad and Bruce Davidson went to the High Court in a dispute over access to a directors and officers insurance policy.

The policy, taken out with QBE Insurance, indemnifies the men against liability they might incur as a result of their actions as directors. It also provides cover for costs they might incur in defending proceedings that seeks to establish this liability.

However, Bridgecorp's receivers (PwC) claimed they had a "charge" over the money payable in the policy for the amount they intended to claim from the directors in civil proceedings.

After hearing the dispute, the High Court's Justice Graham Lang ruled in 2011 that the charge applied to the money, which then prevented Steigrad, Davidson and Gary Urwin from having access to the insurance money.

Steigrad then went on to appeal against that decision in September, which was allowed in December by Justices Mark O'Regan, Terence Arnold and Rhys Harrison, who quashed the High Court declaration.

However, the Bridgecorp receivers were today given leave to appeal that decision in the Supreme Court.

A date has not been set for this hearing, which will essentially focus on which court's decision was correct about the charge.

PwC has filed a civil claim against Steigrad, Davidson and Urwin for $442 million, for an alleged "breach of duty".

Davidson, Steigrad and Urwin have all been convicted in a criminal case brought by the Financial Markets Authority of making untrue statements in Bridgecorp offer documents.
If the directors win the insurance dispute, it may mean there is less money to distribute to out-of-pocket Bridgecorp investors if the receivers' civil claim is successful.

Eric Houghton, who represents 3000 Feltex shareholders taking a class action against a number of former directors, was also given leave to appeal to the Supreme Court today

This case is a dispute over whether Houghton is entitled to a charge over a Feltex insurance policy that would block the defendants from accessing it.

It will be heard at the same time as the Bridgecorp matter.

- NZ Herald

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