Herbert Insurance's bank debt keeps growing
Receivers warn of a likely shortfall to ASB.
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ASB’s exposure to fraud suspect Herbert Insurance Group is closing in on $1 million.
Receivers KordaMentha have revealed the bank - a secured creditor - is owed $948,000 from the collapsed Auckland-based boutique insurance brokerage and its premium funding business Herbert Securities.
That has blown out from the $780,000 estimated in November.
Six months later, KordaMentha says no money had been returned to the bank and warns “it is likely there will be shortfall to ASB”.
The receivers’ May report also warns there is no money available to pay preferential creditors which, at the date of receivership (March 2011) totalled $392,000.
Unsecured creditors, owed $85,000, will also be out of pocket.
“Given it is likely there will be a shortfall to ASB and no funds available to pay preferential creditors, there will not be a return to unsecured creditors,” the report says.
KordaMentha drew $102,322.63 in fees between September 7 and March 6, the report revealed.
Herbert Insurance owed millions to the country’s largest insurers when it was placed into receivership in March 2011, with its sole asset, the client base, swiftly sold to the local arm of global insurance giant Aon at an undisclosed price.
KordaMentha says settlement for the sale had been “triggered” with payment due in August.
An ongoing Serious Fraud Office investigation, which extended to a raid on Herbert’s owner Grant Herbert’s home, relates to an apparent $2.7m shortfall in the group’s trust account, where client premiums were held.
Liquidators Corporate Finance are also investigating the company for possible breaches of the Companies Act 1993 and other insurance-related legislation, and if there are any other recovery avenues available.
It is understood they are waiting on the SFO before taking further steps.
Corporate Finance’s first liquidators report suggests a tug-of-war around security of the funds in the insurance intermediary account that are imbued with a trust and fall outside the security interest held by ASB.
Georgina Bond
Thu, 10 May 2012
Thu, 10 May 2012
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Herbert Insurance's bank debt keeps growing
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