Investors in the Hubbard Management Fund have had all their capital returned.
Tuesday, September 1st 2015, 10:00AM
Five years after being appointed, the Grant Thornton Statutory Managers of the Hubbard Management Fund have resolved all matters and have returned all investor capital along with a small surplus pool as directed by the High Court.
The total of the investor statements prepared by Allan Hubbard indicated the investors were owed $82.8 million.
The Grant Thornton Statutory Managers were appointed in June 2010 and their assessment was that the Fund had a value of $47.7 million after allowing for impairments for traced assets and security claims.
The Statutory Managers discovered that there were poor accounting records and non-existent transactions that were recorded in the accounting records and on the investors’ statements. This poor financial recording had continued over a long period of time generating statements to investors that were not completely supported by assets.
Additionally, shares reported as being owned by HMF were not always held in the HMF nominee companies resulting in complications trying to gain access to the investments.
The statutory managers had to follow an exhaustive and slow process of reconstructing the financial records of every investor back to the launch of the fund, to separately establish what assets the Fund actually owned, unravel related party transactions and loans, seek Court direction on the methodology to determine what investors were entitled to, and take time to sell assets to achieve the best possible result for the investors.
Providing forecasts of the outcome for investors during the assignment was very difficult. There were fluctuating share values and in addition the statutory managers had to investigate numerous claims totalling many millions of dollars from investors and third parties asserting security over HMF assets.
At one stage in the recovery process it appeared that there would be a larger surplus pool, but once all claims were settled and combined with adverse market movements, particularly in the lesser quality assets that HMF had invested in, the amount available was reduced.
The final amount received by Grant Thornton was $55 million which was achieved by making payments of $9.9 million to meet contractual capital calls on investments and to settle claims with third parties holding valid security claims over HMF assets.
After allowing for costs, investors have received distributions of $35.6 million which repays all original capital invested into the fund.
