Hanover withdraws court action over $5m claim

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Hanover Finance has withdrawn court action over a $5 million claim against Allied Farmers.

"Allied Farmers Limited today announced that Hanover Group Holdings Limited and HF Residual Obligations Limited have withdrawn their summary judgement application against Allied Farmers Limited and Allied Farmers Investment Limited," an announcement by Allied to the NZX says.

The claim would now proceed as a civil action, which Allied said it would continue to defend vigorously.

Hanover Finance launched legal proceedings against Allied Farmers over its refusal to pay the company $5 million late last year.

Chapman Tripp, which acts for Hanover, served papers against Allied Farmers over its decision not to make the payment, which was part of the ill-fated deal that saw Allied take on Hanover's loan book.

The deal issued billions of shares in the rural services company to the failed financier's depositors.

Allied insisted it was entitled to cancel the payment, claiming Hanover breached the terms of their agreement in some of the last transactions before the swap.

- Susie Nordqvist