Statutory Manager’s Hubbard update

Update for Hubbard Management Funds investors

If you have access to the Hubbard Management Funds secure site, you can now login to view the Judge’s minute from the hearing held on 3 February 2012. We will continue to upload documents lodged with the court once they are filed and as soon as these are available.

Update on Aorangi Securities Limited and associated charitable trusts under Statutory Management

6 December 2011

The 9th Report on Aorangi Securities confirms that disputes and unresolved issues over ownership of Aorangi Securities assets are delaying the realisation of investors’ money.

Statutory managers regret that they will be unable to make further capital distributions to investors at this time and this position will be reassessed in mid-2012. They acknowledge the hardship that some are suffering, and make assurances that they are moving as quickly as possible to both protect and return investments to investors in Aorangi.

The continue to work with Mrs Hubbard and her advisers and support her desire to reach a settlement with her creditors and with Aorangi, while remaining mindful of the aim to maximise the return to Aorangi investors.

Separately the statutory managers are trying to collect various third party loans, but many of these are complex and have associated legal difficulties such as receiverships, liquidation applications, disputes and shareholding issues.  It is believed the realisation process will be significantly advanced over the next six months and certain sales are likely to be timed to coincide with the end of the dairy season in May or June next year.

Total realisations to date are approximately $34 million, but is less than the previously estimated $40 million because of a dispute with a non-Hubbard shareholder in a large farm.  About $20 million is being held pending determination of ownership of the proceeds. 

As at September, investors have received 12c in the dollar or close to $11.5m.  Some investors are also receiving a wellbeing allowance.  This is determined by a third party assessor.

Update on Hubbard Management Funds (HMF)

6 December 2011

The statutory managers of Hubbard Management Funds have filed papers in the Court for a determination of the equitable method of distributing the Fund back to investors.

The complexity of the issues surrounding the management of the Fund that have been uncovered mean that the Court needs to make a determination on what is a fair method of distribution states the 9th  HMF Report.

The value of the investments in the Fund as reported on investor’s statements prepared by Mr Hubbard as at 31 March 2010 is significantly greater than the value of the underlying investments at that time.  With global volatility, the value of the investments has declined further.

In later years, Mr Hubbard constructed the Fund on a high risk/high return philosophy with a bias towards smaller listed companies in the resource sector.  It appears to have been assembled on an ad hoc basis. The Fund did not have a documented guidance structure or investment allocation methodology. The value of the fund is now about $44 million.

The portfolio of investments set out in investor statements from Mr Hubbard may not in fact have been held by the Fund on their behalf at that time.  Transactions that were reported as having occurred in investor statements may not have occurred at all.

The accounting system operated by Mr Hubbard resulted in valuation and accounting errors in the investor statements.  As a result, there was no easy way to align the investments owned by the Fund with the investments allocated to investors.

The report advises that the statutory managers are now asking the Court to approve the proposed method of distributing the Fund to each investor in the context of all of the issues that have confronted the statutory managers.  The situation uncovered does not appear to have been fully covered in previous case law.

The Court hearing is expected to commence mid-2012, but there are issues to be resolved such as how investors may be represented.  There are over 2,000 pages of papers that have been filed.  The complexity of this matter could materially affect the time needed to complete proceedings and for the Court to reach a determination. As soon as the Court announces a hearing date from, statutory managers will report to investors setting out a possible timetable for payments to be made from HMF.

Other matters

The next communication with investors will be to provide a documentation package relating to the papers filed with the Court.

• Ninth Aorangi Statutory Mangers’ Report 30 November 2011
• Ninth HMF Statutory Managers’ Report 30 November 2011
• Letter to Aorangi Investors 30 September 2011
• Letter to HMF Investors 30 September 2011
• Seventh Aorangi Statutory Mangers’ Report 29 June 2011
• Seventh HMF Statutory Managers’ Report 29 June 2011
• Sixth Aorangi Statutory Mangers’ Report 4 March 2011
• Sixth HMF Statutory Managers’ Report 3 March 2011
• Fifth Statutory Managers’ Report 25 November 2010
• Fourth Statutory Managers’ Report 28 October 2010
• Third Statutory Managers’ Report 30 September 2010
• Second Statutory Managers’ Report 26 August 2010
• First Statutory Managers’ Report 12 July 2010

Investor liaison

A group of six investors has been established to meet with statutory managers to discuss issues facing investors. It has become apparent many investors are having difficulty understanding the many complex issues in Aorangi and HMF and how these impact on their investments. The liaison group will disseminate information to other investors from the meetings.

The liaison group can be contacted via Jan and Noel Macpherson. Their email address is janandnoelmac@hotmail.com and contact phone number is +64 (0)3 685 8095.

Frequently asked questions

A list of frequently asked questions are available. Click here to view. These questions will continue to be updated from time to time as new questions and information come to hand. It is recognised that not all investors will have computer access so copies of these questions will be available to be mailed to investors on request.

Postal delivery information for investors

Copies of the HMF and Aorangi Statutory Managers Reports were placed in the post 30 November 2011 for investors.

Further information

We will look to keep investors informed on a regular basis.

The Media are asked to contact Nick Wilson of Acumen Republic on +64 (04) 494 5135 or  NWilson@acumenrepublic.com