The statutory managers of Aorangi Securities - insolvency experts Grant Thornton - said they may now be unable to return almost 100c in the dollar to investors because the ownership of some of the failed company's assets is in dispute.

In papers submitted to the High Court, Jean Hubbard - wife of South Canterbury Finance founder, the late Allan Hubbard - is disputing the beneficial ownership by Aorangi of $60 million in assets, the statutory managers said in their 11th report.

The court case to confirm that the assets belong to Aorangi and not the Hubbards has a provisional hearing date of October 29 in Timaru.

If that date is ultimately unavailable, the hearing will likely be 2013.


The High Court challenge means the possibility of a significant loss to investors rather than closer to 100 cents in the dollar if the $60m of assets were to be available for distribution to Aorangi investors, the managers said.

"It is our view that the Hubbards did not dispute the fact that these assets belonged to Aorangi," the managers said.

"Our reason for seeking a Court declaration is to confirm that the correct action was being taken," they said.

The assets in question were transferred to Aorangi by the Hubbards. They then attempted to transfer those same assets to several trusts, the managers said.

"The unwinding of those subsequent transactions back to the Hubbards was a deliberate and considered act because on our analysis the legal processes in the original transactions were ineffective and invalid," they said.

The managers said sufficient funds are on hand to make a further 3c capital payment to investors on July 11. This will bring the total repayment to investors to 15c in the dollar, they said.

Separately, the managers said there had been progress in recovering other third party loans valued at about $39m.