The High Court yesterday released its final decision on how returns to Hubbard Management Funds (HMF) investors will be calculated and initial distributions are likely to occur in the first quarter of 2013.
“It has been a complex set of issues, so we are very pleased to have the methodology sorted,” said the Statutory Managers.
“To calculate the distributions, HMF will be effectively split into two pools: the “capital pool” is the amount required to repay all investors their original money invested to the extent that they have not already made withdrawals from HMF. As directed by the Court, capital gains, interest and dividends that were reported on investor statements will not be considered as part of the capital pool.
The “surplus pool” is the amount available from realisations of assets after paying all capital amounts due. This will be allocated under a formula approved by the Court.
The capital pool payments will be made first and once these have been made, payments from the surplus pool will commence.
The earlier interim distribution previously approved by the Court meant that when the Court issued its interim order in June 2012, some investors had received more than the original capital they had invested in HMF.
The Courts’ “claw back” of these overpayments which resulted from the June 2012 order has now been removed. The Statutory Managers will no longer be required to seek repayments from investors previously impacted.
“Payments will be made from the realisation of assets and will be made proportionately over time. We will need to retain sufficient funds to honour HMF’s contractual commitments to private equity funds and pay costs.
“The sales process will take a considerable period of time to complete. We have previously noted that many of the investments are illiquid or in long term private equity funds.We will not sell assets on a “fire sale” basis. We need to maximise the recovery for investors. It could take at least two years to repay the capital pool fully. Surplus pool payments will not commence before all the capital pool is repaid.
“We will be unable to finalise each investor’s entitlements until we have verified all adjustments arising from the cash deposit and withdrawal confirmations from investors. The period for these confirmations closed last night and a large number of responses have arrived over the last two days. We will write to all investors by the end of next week setting out their final entitlements. There will be some investors who have made more withdrawals from HMF than their deposits. These investors will not receive any further capital payments. Under the Court approved formula, some investors may not receive any payment from the surplus pool.
“The only other issue that may arise is if an investor chooses to appeal the decision of Justice Chisholm. The appeal period expires on 23 January 2013. Should an appeal be lodged, all distributions will be delayed until the appeal is resolved. This could take the remainder of 2013,” concluded the Statutory Managers.
Julian Light
Acumen Republic
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