The multi-million dollar dismemberment of Queenstown’s failed Western Pacific Insurance will drift into a fourth year.
In their latest report just released, liquidators David Ruscoe and Richard Simpson say their wash-up “is unlikely to be completed in the next six months”.
Ruscoe and Simpson also warn: “At this stage it is not practical to estimate a completion date for the liquidation.”
Going by this and earlier reports, Western’s crash is likely to result in a deficit of about $34 million.
Canterbury quake claimants are likely to get 66 cents in the dollar but whistle for another $16.1m.
Insurance claimants outside Canterbury are expected to come up short by about $15.7m and unpaid trade creditors, premium refunds and broker commissions may total a further $1.9m.
Western was put into liquidation in April 2011 by its co-owners, prominent Queenstown businessman Graham Smolenski and his Australian-based brother-in-law Jeff McNally.
Smolenski is a shareholder and director of snow-biz giant NZSki. Former track gallops include fronting Millbrook Resort and chairing Destination Queenstown.
At the time of its collapse, pip-squeak insurer Western had issued policies with a total risk profile of $10.2 billion – not a misprint – before being brought to its knees after the Christchurch earthquakes.
Western had a Standard & Poors rating of B minus – “weak” – and its 2009 financials put “shareholders equity” and “net assets” at just $611,335.
The crash also exposed the fact McNally and two of his other companies had been banned in 2002 by the Australian Securities & Investments Commission from selling polices on behalf of an unregistered insurance firm in the Marshall Islands.
ASIC “acted to protect consumers”, the Aussie watchdog’s website says.
Before folding, Western had written policies in Australia, Abu Dhabi, Chile, Fiji, the Cook Islands, Samoa, Singapore and Vanuatu, as well as New Zealand.
While liquidators have had marked success haggling with reinsurers over Canterbury quake claims, liquidation costs and legal fees have already chewed up $915,000.
The liquidators also report “an investigation into the affairs of the company is ongoing to determine if there are possible recoveries in respect to voidable transactions and whether the company traded recklessly”.
Such an investigation is a normal statutory duty for liquidators.
Smolenski has previously told Mountain Scene that he’s confident there was no reckless or insolvent trading or “extraordinary payment … to related parties”.
Contacted for this story, Smolenski says he hasn’t seen the latest liquidators’ report and has no comment to make.
The Queenstown businessman has earlier stated he lost several hundred thousand dollars in Western’s crash.