CBL Corporation, once worth $750 million, put into liquidation

Monday, 13 May 2019

Lights blazed late into the night as CBL Insurance staff attempted to save the company in 2018. The failures of CBL Insurance has led to a review at the Reserve Bank.

CBL Corporation, which was once valued at $750 million, has been placed into liquidation by the High Court in Auckland.

CBL Corporation was a feature of many KiwiSaver funds, but the NZX sharemarket suspended trading in its shares in February last year after it emerged its subsidiary CBL Insurance had run into serious trouble in Europe.

Directors of failed insurer CBL Corporation withdrew their opposition to its liquidation before the liquidation hearing on Monday at which Brendon Gibson and Neale Jackson of KordaMentha were appointed as liquidators.

CBL Insurance was not a household name in New Zealand, but did do some local insurance business, providing guarantees to Kiwi buyers of new homes that they had been built without any defects.

* Reserve Bank orders review after CBL Insurance liquidation

* Thousands of recently built homes covered by guarantees from CBL

* High Court places CBL Insurance in interim liquidation**

It was rising claims costs in CBL Insurance's similar, but much larger, building guarantee business in France that tipped CBL Insurance into trouble.

CBL Corporation's shares were worth a combined $747 million when trading was suspended in February. Some fund managers have marked them down to zero.

CBL Insurance was put into liquidation in November at the High Court in Auckland.

Do you have a CBL guarantee? Contact rob.stock@stuff.co.nz

CBL Corporation directors Alistair Hutchison and Peter Harris attempted to secure a deal that could save CBL Insurance and CBL Corporation, but today said that bid had failed.

'Unfortunately, even after 15 months, the banks have not seen any material money from the sales of CBL Corporation assets, most of which are still in process. So the very large bank debt has not reduced,' Harris said.

The banks had been prepared to give the directors time to pay down debts, he said.

But in November they failed to gain support for a Deed of Company Arrangement (DOCA) plan to restructure CBL Insurance's debts.

But, Harris said: 'Although Alistair and I consider that we have the creditors by numbers to support the DOCA, we don't have the creditors by value required without the banks' agreement.'

Harris said the directors believed the DOCA would have provided a 'viable commercial pathway to recapitalisation', but said the Reserve Bank had opposed the proposal.

'Despite our efforts, CBL Corporation will go into liquidation,' Harris said.

Toby Fiennes, the Reserve Bank's head of prudential supervision, said last November that the in-depth review of CBL Insurance and which led it it being put into liquidation, indicated that CBL 'had been insolvent for some years'.

And Deputy Governor and head of financial stability Geoff Bascand said late last year the Reserve Bank had commissioned 'a thorough independent review of the CBL Insurance case to identify lessons for itself and the insurance regulatory regime'.

CBL Insurance was the third insurer to go bust in recent years, though the two previous failures - AMI and Western Pacific - failed in the aftermath of the Christchurch Earthquakes before insurers were fully licensed by RBNZ.

The Reserve Bank review was being conducted by lawyers John Trowbridge and Mary Scholtens, and would cover the period from CBL Insurance's licensing in 2013 through to the interim liquidation.