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 says.

"That means that everything from hereon operates under a protective umbrella of voluntary administration," Harris told the Herald.

Harris said the administrators, from KordaMentha, will continue working through a plan to restore "the hole in a balance sheet" which has been caused by increase reserve strengthening required for the company's French construction business in CBL Insurance's books.

That plan involves selling off the "run-off book of liabilities", which Harris said is 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 as interim liquidators of CBL Insurance on Friday evening 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 submitted 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 Limited or any other companies in the group," CBL Insurance said in a statement.

Johnstone, one of the interim liquidators, today told the Herald that she was assessing the financial position of the business and would continue to operate it.

The confidentiality orders meant she could not comment further.

Justice Courtney's order – according to court documents - enables 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 which country they're located in.

NZX suspended the CBL Corporation stock this month due to concerns the market operator's regulation team has about whether the company has 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 tomorrow, 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 continue to remain in force.

The Irish central bank has also required CBLIE to write to all appointed insurance brokers and distribution partners to inform them of the direction and to inform policyholders, it said.

"CBLIE has sought legal advice in Europe and has instructed its European legal counsel to request the CBI to withdraw this direction," the company said.

"Failing this, CBLIE reserves its rights to take any action it deems necessary in order to protect its interests."

- NZ Herald, BusinessDesk