Australian home buyers hit by CBL fall-out

Thousands of Australian property buyers have been hit by the New Zealand insurer CBL Insurance being placed into liquidation.

Deposit Power, an Australian property finance company, which sold deposit guarantee bonds backed by CBL Insurance has been put into administration.

According to the Australian Financial Review the move has left an estimated 10,000 residential, commercial and property investors in the lurch about the fate of nearly A$300 million worth of deposits.

A deposit bond is a type of insurance policy that acts as a guarantee to a property seller that the purchaser will pay the deposit at settlement.

CBL Insurance was placed into interim liquidators hands on February 23 by the court after an application by the Reserve Bank - New Zealand's insurance regulator.

The Reserve Bank made the application after the company paid $55 million to overseas companies, breaching the central bank's orders.

CBLI's parent company, NZX-listed CBL Corporation then called in voluntary administrators.

Deposit Power administrators Henry Kwok and Gavin Moss wrote to stakeholders on March 1 saying the company had acted as an agent for CBL Insurance and was not the issuer of the deposit guarantees.

"All deposit guarantee bonds were issued by CBL Insurance and CBL Insurance is liable to pay any valid claims payable to any beneficiary of any guarantee issued by them."

But CBLI's liquidators have told insurance policy holders and holders of surety and financial risk bonds that the company was not currently in a position to make any claim payments.

It has urged policy holders to get advice to determine whether they need to purchase new insurance cover or secure additional or replacement bonds.

Kwok and Moss said the appointment of interim liquidators to CBLI meant no further deposit guarantees could be processed by Deposit Power and it could no longer continue business operating as an authorised manager of CBL Insurance.

However, they said there was an interested party which may purchase the business.

"...but the sale has its complications as they company was only an agent/authorise manager of CBL Insurance.

"Given the nature of the company's operation, any sale transaction will need to happen quickly, or it will not happen at all."