Western Pacific worsens


Liquidators report a rising river of red ink at failed Queenstown insurer Western Pacific. 

A new report to creditors by liquidators Simon Thorn and David Ruscoe predicts a claims shortfall of $14.2 million. 

Creditor debts would take Western’s total deficit to about $18m. 

That may worsen as further claims are assessed, the liquidators warn. 

Thorn and Ruscoe were appointed in early April by Western director/shareholders Graham Smolenski, a prominent Queens­town businessman, and his brother-in-law Jeff McNally. 

Their first liquidators’ report had the makings of a $5m deficit. 

By June that had blown out to $10m and worse was forecast, Thorn and Ruscoe correctly warned. 

Insurance claims now top $46m – $40m from the two Christchurch earthquakes plus $6m from other claims in New Zealand and overseas. 

When it crashed, the small insurer had written policies with $10 billion of risk, the liquidators claimed. 

Only about $34m of reinsurance has been secured, they say. 

Thorn and Ruscoe go to court on September 12 for approval to use this $34m for part-paying creditors as well as insurance claimants – and their own “fees, expenses and remuneration … if no other funds are available to us”. 

If the court approves, insurance payouts could be as little as 66 cents in the dollar. 

The liquidators are still resisting a creditors’ meeting. 

“The company has limited funds,” the report says.