The liquidators of failed insurer CBL have identified €53.7 million (NZ$91 million) in voidable transactions which they are seeking to recover from the company's Irish subsidiary.
BusinessDesk can reveal the liquidators are pursuing legal action against CBL Insurance Europe DAC, which is presently in administration.
The European subsidiary moved into administration in March 2018 on the application of the Central Bank of Ireland.
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Kare Johnstone and Andrew Grenfell from accounting firm McGrathNicol were appointed to the CBL liquidation in November 2018 after being interim liquidators from February that year.
Johnstone has confirmed the administrator of the Irish business, Kieran Wallace, has been served, and she continues to investigate further potential voidable transactions. She would not comment further, but the second liquidators' report is expected before the end of the year.
Under New Zealand law, transactions that might have given preference to one creditor over another within a specific timeframe can be deemed voidable and the transactions undone, meaning the money would go back into the creditors' pool.
A High Court decision of Justice Christian Whata dated Aug. 26 outlines several transactions viewed as voidable, including a liability settlement agreement between the European arm and its parent, which was effective in 2017 but dated Jan. 30, 2018.
The other transactions the liquidators identify as voidable, according to the decision, include a reassurance trust deed dated Nov. 6, 2017 between CBL Insurance and Wilmington Trust (SP) Services (Dublin), a payment of €11.9 million from the New Zealand company to the European one, and further amounts, to a total of €53.7 million.
Justice Whata's judgment was a preliminary one allowing the liquidators to serve the proceedings on the overseas administrator.
Wallace has not responded to BusinessDesk's request for comment.
Barrister Grant Slevin says there could be issues of jurisdiction to get the money, although Ireland has a similar legal system to New Zealand.
"Any judgment will be a provable debt in an Irish administration at the end of the day," the co-author of Insolvency in New Zealand said.
The most recent liquidators' report for CBL Insurance, for the six months to May 2019, recorded $1.13 million in fees for the period. The liquidators spent this period focusing on reducing the company's risk and have not yet called on creditors to submit how much they are owed.
The company's ultimate parent CBL Corp is also in liquidation, with Korda Mentha's Neale Jackson and Brendon Gibson appointed. Their first report, issued in June, identified almost $180 million owing to creditors.
In recent months, two class actions relating to CBL's downfall have been launched. One is by law firm Glaister Ennor and Australia litigation funder IMF Bentham on behalf of Basil Ian Livingstone and others who own about 14 per cent of the company. The other comes from LPF Group backed by CBL's major institutional shareholders Harbour Asset Management, Australia-based Argo Investments and Forsyth Barr.
CBL Corp had a market value of $747 million when its shares were suspended from trading on NZX and ASX in February 2018
It listed in 2015 after raising $125.3 million from a float with 80.9 million shares sold at $1.55 each. The shares were valued at $3.17 when trading on NZX was suspended.