Hih Insurance Holdings (NZ) Limited (In Liquidation) v Hih Casualty and General Insurance Limited (In Liquidation) HC Auckland CIV 2001-404-004097

[2008] NZHC 2412

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2001-404-004097

UNDER  The Companies Act 1993

BETWEEN  HIH INSURANCE HOLDINGS (NZ) LIMITED (IN LIQUIDATION) Plaintiff

ANDHIH CASUALTY AND GENERAL INSURANCE LIMITED (IN LIQUIDATION)

Defendant

Hearing:         16 July 2008

Counsel:         M V Robinson for Liquidators

Judgment:      17 July 2008 at 2:00pm

JUDGMENT OF ASSOCIATE JUDGE ROBINSON [Approving remuneration of liquidators]

This judgment was delivered by me on 17 July 2008 at 200pm, pursuant to Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Simpson Grierson, Private Bag 92518, Auckland

HIH INSURANCE HOLDINGS (NZ) LTD (IN LIQUIDATION) V HIH CASUALTY AND GENERAL INSURANCE LTD (IN LIQUIDATION) HC AK CIV 2001-404-004097  17 July 2008

[1]      The liquidators seek approval of rates of remuneration from 1 April 2008 under s 284 (1) Companies Act 1993.  For reasons set forth in the Minute I issued on

27 June 2008 I invited further submissions on whether the application of the liquidator for approval of the rates of remuneration should be served on other interested parties including shareholders or creditors who could be adversely affected by such an order.  I was also concerned at the time taken to conclude the liquidation, the company having being placed into liquidation in July 2001.

[2]      Counsel for the liquidator has supplied a very helpful memorandum.  Counsel has attached to the memorandum a chart listing all the companies involved in the HIH Insurance Group collapse.   It is submitted by counsel for the liquidators that unnecessary costs would incurred in involving all the shareholders and creditors of all upstream companies in this application.   Such increase in administrative costs would come without any additional benefit.

[3]      Counsel also advise that the liquidators expect to file an application for appropriate directions for a liquidation scheme to bring this liquidation to an end within six months.   On receipt of an order approving the scheme the liquidators expect   a   period   of   approximately  12   to   18   months   to   communicate   with policyholders and allow time for receipt and adjudication of claims.

[4]      This  has  been  a  most  unusual  liquidation.     It  has  been  commercially successful.  The liquidators have paid dividends amounting to 100 cents in the dollar on accepted claims while maintaining adequate reserves of funds to comply with a court order of 28 November 2003.  The court order of 28 November 2003 requires the liquidators to retain a sum of $35,000,000 on for outstanding claims.  According to the latest financial report balance of funds on hand as at 19 January 2008 amount to $58,881,420.  The liquidator estimates that note holders in HIH Holdings who at the time of liquidation were expected to be paid 9 cents in the dollar are now likely to receive 22 cents in the dollar.

[5]      Having regard to the unusual aspect of this liquidation and the fact that the liquidators have been very successful in the way in which they have carried out this liquidation, I am satisfied that it is appropriate to approve their rates of remuneration

in accordance with the application they filed.   Consequently from 1 April 2008 I

approve the following rates of remuneration:

a)       Partners  $575 p/h b)       Directors  $500 p/h c)       Consultants  $500 p/h d)       Associate Directors                $450 p/h e)       Senior Managers  $400 p/h f)        Manager  $350 p/h g)       Assistant Managers                $300 p/h h)       Senior Analysts  $270 p/h i)        Analysts  $230 p/h j)        Secretarial/administration      $150 p/h

[6]      These rates of remuneration are approved to subject to the overriding power of the court to review the amount to be paid to the liquidators on final approval of

the accounts.

M D Robinson

Associate Judge