Liquidators of Queenstown insurer Western Pacific want creditors to pay $86,000 for the chance to share in a $34 million payout.
Simon Thorn and David Ruscoe of accountancy firm Grant Thornton are asking creditors to fund an appeal against a High Court verdict issued just before Christmas.
Justice Simon France ruled that $34m of reinsurance money should be dedicated to part-paying 183 Christchurch quake claims, which presently total $46.5m but are expected to climb.
The judge rejected the liquidators’ proposal to divvy up the reinsurance evenly among all Western claimants – not just Christchurch ones – together with the crashed company’s trade creditors.
The liquidators also failed to get the judge’s permission for their own fees to come out of the reinsurance.
Writing to creditors last month, Ruscoe and Thorn say “the liquidation presently has limited funds”.
“Accordingly, creditors who would benefit from a successful appeal are being asked to consider funding such action.”
Their legal advice is that Justice France may have made errors of law so the prospects for an appeal are fair, they say.
Legal fees for the appeal would be $46,000, the liquidators’ costs about another $29,000 and $10,000 may also have to be paid in advance court costs, they estimate.
The pay-off, Thorn and Ruscoe point out, is that if their appeal is successful and all claimants and creditors are granted an equal share of the $34m reinsurance, then everyone stands to get about 50 cents in the dollar.
That won’t please Christchurch quake claimants, who presently stand to get about 75 cents for every dollar they’re owed.
Other than Christchurch insurance claimants, Thorn and Ruscoe reveal that Western faces $1.2m in other claims from elsewhere in New Zealand, $2m in Pacific Islands claims and a hefty $13.5m of Australian-based claims.
Creditors willing to fund the appeal must advise the liquidators by January 20 to meet the court deadline.
Due to the holidays, Thorn couldn’t be contacted about the cash call but his earlier comments indicate the entire liquidation may be at the crossroads.
Before Justice France’s verdict, Thorn told Mountain Scene: “One of the additional matters we’ve asked the court to rule on is how we [as liquidators] get remunerated.
“Clearly, the only funds available are those reinsurance proceeds.”
Before writing to creditors, Thorn refused to tell the paper how the liquidation would now be funded and whether the promised investigation into Western’s affairs would proceed.