CBL civil proceeding adjourned until 2026

Former CBL chief executive Peter Harris. Harris made a joint application to the High Court to adjourn the IPO proceeding. Photo / Dean Purcell

A High Court judge has adjourned the trial for the Financial Market Authority’s initial public offer proceeding against liquidated insurance company CBL Corporation, its managing director Peter Harris, director Alistair Hutchison and chief financial officer Carden Mulholland.

The corporation (CBLC) was listed on the New Zealand and Australian stock markets before a series of financial and regulatory issues led to its collapse and eventual liquidation in 2019.

Legal proceedings followed, brought by shareholders, the FMA, the Serious Fraud Office (SFO) and liquidators.

The FMA brought two proceedings: the initial public offering (IPO) and the continuous disclosure proceeding.

They were set to be heard together starting June 25.

After a High Court trial in 2023, Harris and Mulholland were found not guilty in September of theft, false accounting and obtaining by deception, charges brought by the SFO. The SFO sought leave to appeal two of the eight charges on which the High Court acquitted the defendants. In May, the Court of Appeal granted that application.

Harris and Mulholland applied to the High Court to adjourn the IPO proceeding until the conclusion of the SFO’s appeal.

The FMA opposed the application.

On June 5, Justice Ian Gault granted the application to adjourn the trial of the IPO proceeding.

“The balance and the interests of justice favour granting an adjournment to avoid the risk of prejudice to Mr Mulholland and Mr Harris pending a possible criminal retrial,” he said. “This outweighs the FMA’s interests, including that of avoiding delay at the expense of open justice.”

The IPO proceeding was adjourned until April 2026.

The FMA’s continuous disclosure proceeding against Mulholland is not affected by the adjournment of the IPO proceeding and is scheduled to start on June 25.

Hutchison died in December 2021 but the IPO proceeding continues against the executor of his estate.

The executor has applied for the claim against the estate to be struck out. A decision on that is pending.

Background

CBLC is the parent company of a group of companies that operated as an international credit surety and financial risk insurer headquartered in Auckland.

CBL Insurance (CBLI) is a wholly owned subsidiary of CBLC, owned through LBC Holdings New Zealand.

Harris was the managing director of CBLI from December 2006 and CBLC from November 2013.

Hutchison was a non-executive director of CBLI from December 2008 and CBLC from November 2013.

Mulholland was the chief financial officer of CBLC and CBLI at all material times.

In October 2015, after an IPO, CBLC listed on the NZX and ASX.

The IPO raised $125 million. In November 2017, CBLC’s board advised the Reserve Bank of New Zealand (RBNZ) that CBLI was likely to breach its solvency condition and required further reserve strengthening.

CBLI’s appointed actuary recommended a further reserve strengthening of $147m.

In early 2018, NZX placed a trading halt on CBLC’s shares and later suspended quotation of its shares on the basis it was concerned CBLC was in breach of its continuous disclosure obligations.

Interim liquidators of CBLI were appointed, and CBLC, and nine of its subsidiaries, were placed into voluntary administration.

In November CBLI went into liquidation.

In May 2019 CBLC went into liquidation.