The Reserve Bank of New Zealand withdrew from a scheduled liquidation hearing involving CBL Insurance slated to take place this week and has requested that the interim liquidation continue.
The High Court has ordered CBL Insurance be placed into interim liquidation on an application by the Reserve Bank as the insurer's prudential supervisor, in late February. The central bank alleged that CBL Insurance breached solvency margins and statutory directions. CBL Insurance is a unit of NZX-listed company, CBL Corporation, which is in voluntary administration.
This week's hearing was to consider the application for liquidation that RBNZ and the CBLI interim liquidator had been seeking to be heard urgently, according to a statement from CBL Insurance managing director Peter Harris.
Harris said the RBNZ advised the Court that it was no longer pursuing a liquidation order at this stage and that it wished to put off the hearing for at least two months.
A spokesman at the central bank said "the RBNZ sought an adjournment and has asked that the interim liquidation continue until the substantive hearing is scheduled."
The application for liquidation is being opposed by CBL Insurance, led by Harris and Alistair Hutchison, as well as KordaMentha, the voluntary administrators of CBL Corp and Elite Insurance, CBL Insurance's largest creditor.
Harris and Hutchison have proposed an initial restructure plan that has been circulated to the voluntary administrators with the objective that all CBL Corp creditors get paid in full, NZ insurance policyholders all get paid, and shareholders retain shares in the future business to give them some future value to their shares.
The plan would seek to avoid liquidation of CBLC and CBLI.
"The proposal to offer a commercial solution to the position CBLI and CBLC presently face is a positive step and aims to restore value to the creditors and shareholders," Harris said. "We are committed to invest significantly to bring about the plan, and were prepared for the hearing today, but a short delay will allow time for the restructure plan to be put to all
CBLC shareholders and creditors, and we look forward to doing so."