Shareholders Association wants CBL Corp liquidated

Peter Harris, managing director of builder's risk insurer CBL Corporation called in voluntary administrators KordaMentha in March. Photo/Dean Purcell.

The Shareholders Association has called for CBL Corporation to be put into liquidation ahead of a watershed report due to be released to the sharemarket today.

NZX-listed construction risk insurer CBL appointed KordaMentha voluntary administrators on March 2 after the Reserve Bank sought an interim liquidation of its New Zealand supervised arm CBL Insurance and the Central Bank of Ireland made a similar move against the insurer's European division.

CBL had its stock suspended from the NZX February 8 amid concerns from NZX Regulation about the information it had given the market, following engagement between it, CBL, the Financial Markets Authority (FMA), the Reserve Bank, and a number of overseas regulators with prudential oversight of CBL's international insurance business.

A watershed meeting must normally be held within 25 working days of a company being placed into voluntary administration but KordaMentha applied to the High Court to have the date extended.

KordaMentha must release the watershed report to creditors and the market by May 11, and the meeting must be held by May 18th.

The meeting is designed to give creditors the choice to resolve that a deed of company arrangement be executed, resolve that the administration should end, or appoint liquidators.

Michael Midgley, chief executive of the New Zealand Shareholders Association (NZSA), said it had reviewed recent developments in respect of CBL and its subsidiaries and concluded that liquidation of CBL Corporation was desirable.

"CBL, the head company, is in voluntary administration, while CBL Insurance is in interim liquidation, a situation NZSA considers unsatisfactory."

Midgley said the association believed liquidation would be in the best interests of investors as it offered more options for securing residual value.

"If litigation is found to be necessary the liquidators would have greater powers to pursue a variety of potential claims," he said.

Midgley said the association supported the appointment of a strong independent liquidator who would act in the best interests of all who have been or may be affected in this case.

Last month Associate Judge Warwick Smith decided to set down a two day hearing in June to decide whether CBL Insurance, should continue to be run by liquidators McGrathNicol.