Court hears arguments about distributing Hubbard funds
The High Court in Christchurch is being asked to give directions about the repayment of funds from Hubbard Funds Management.
The investors, owed $82 million, were initially close friends and family of Mr Hubbard but the number grew to about 300 portfolios.
Mr Hubbard never issued a prospectus or investment statement or set up a trustee.
Statutory managers Grant Thornton, via lawyer Frazer Barton, told the court that the funds were valued at about $44m and that the late Mr Hubbard’s accounts were largely fictional.
The court is being asked whether Grant Thornton should treat the fund as a collection of separate portfolios or a pool of funds.
Mr Hubbard had set up a holding company and allocated shares to investors on the basis of the amount of funds they invested.
But Grant Thornton says the individual portfolios were created for each investor and some had been invested for longer than others. If paid out on this basis some investors would take losses.
Investors' lawyer Peter Whiteside, said an investor had polled 160 fellow investors and they had nearly all indicated they wanted the funds pooled and paid out in proportion to what they invested.
Andrew Butler acted for the estate of Mr Hubbard. Effectively, Mrs Hubbard is trustee of his estate.
Mr Butler said the net cash investment in total by investors was $13.5m, which meant they could be paid out their capital, plus about 7% compounded annual returns for the time they were invested.
Other representations were made by “court friend” Nicholas Till, also acting for the Serious Fraud Office against South Canterbury directors in that pending action.
Speaking outside the court, Mr Barton, for Grant Thornton, told NBR ONLINE he expected Justice Lester Chisholm might call for more representations.
But Mr Barton hoped for a ruling in the next four weeks, given the need to act speedily in spite of the complexities.
The repayment propositions put forward by Mr Hubbard’s estate would require considerable work to calculate how much each investor was entitled to, he said.
The Hubbard estate had expressed sympathy in court for the problems caused by the statutory management. It was also apparent that many investors still held their faith in the Timaru financier, Mr Barton said.