Liquidate CBL, say administrators

Administrators of CBL Corporation have advised the company should be liquidated.

In a report to creditors issued late today Brendon Gibson and Neale Jackson of KordaMentha said liquidation "will enable the liquidator to further investigations into the events leading up to the group’s various insolvency procedures."

A watershed meeting for creditors of CBL Corporation will take place at the offices of KordaMentha in Auckland's Queen St next Friday afternoon.

CBL's other New Zealand subsidiaries should remain in voluntary administration, say administrators.

The High Court has given approval to delay a watershend meeting for those companies until August 10.

In their statement to the NZX the administrators say they "believe that having those subsidiaries remain in administration best supports the asset realisation processes that are underway for the business units. It also retains optionality for any future restructuring proposals to be put to creditors. Certain of CBL’s directors are working on a proposal to restructure the group. The administrators will continue to work with them to further develop that plan."

Calls to KordaMentha have not been returned today.

The administrators said they don't have control of CBL's insurance subsidiaries CBL Insurance in New Zealand and CBL Insurance Europe in Ireland so it had limited information about their finances.

"It is too early to assess the return to creditors or shareholders," they said.

"This will be dependent on;

• any restructuring proposal, including that currently being worked on by certain of the group’s directors.

• the sale processes currently underway for the group’s business units.

• the outcomes of the CBLI and CBLIE insolvency processes. The Reserve Bank’s application to liquidate CBLI is being opposed. The hearing is set down for 5 and 6 June 2018.

• any potential legal actions that may be available."

Shares in NZX-listed insurer CBL have been suspended since February amid regulatory alarm about its solvency and unauthorised payments to overseas entities.

Before a trading halt was imposed the company had a market capitalisation of $747 million.

It is feared the current equity value may be close to zero.

Administrators said CBL Corporation owed $144m to its bankers ANZ, ICBC and Bank of China, a debt supported by guarantees from other group companies. Including bank debt creditor claims on the company totalled $172m.

However, "CBLC is unable to meet its obligations to creditors," they said.

Group bank borrowings as of December 31 were $165m.

The administrators said CBL group appeared to have made a loss of $61.3m in the year to December, mainly because of reserve strengthening and the write-off of $44m of receivables from Luxembourg subisidiary SFS.

The unaudited balance sheet showed group net equity of $250m, down from $292m a year earlier, they said.