HIH creditors have approved 12 schemes of arrangement.
HIH creditors should receive their first payment of five cents in the dollar after creditors approved 12 schemes of arrangement at a creditors' meeting in Sydney on 29 March.HIH liquidator Tony McGrath, from McGrathNicol&Partners (McN+), said he still had to apply to the New South Wales Supreme Court for the schemes to be ratified. “Creditor approval of the schemes is an important step forward in the liquidation process,” he said.
McGrath said the schemes' benefits included allowing final payment far earlier than would have occurred under liquidation alone, a more efficient claims agreement and clarification of the interpretation of Australian law. McGrath had received permission to call the creditors' meeting from NSW Supreme Court Justice Reg Barrett, who had to decide whether the schemes were likely to be approved by the court if approved by creditors.
The schemes had to be rewritten to take into account a UK court ruling that money recovered by the English provisional liquidators of HIH companies would not be released to the Australian liquidator. Justice David Richards, in the UK Companies Court, said Australian and UK insolvency regimes were “materially different”. Under Australian law, reinsurance assets are treated differently from other assets and insurance creditors have priority. McN+ has been granted leave to appeal against the UK decision.
Under the Australian schemes of arrangements, once ratified by the court, recovered money will be distributed proportionately. Four creditors for whom HIH had arranged facultative or fronting reinsurance were represented at a November court hearing.
The HIH Group collapsed on 15 March 2001 with liabilities of A$9bn, according to Justice Richards's judgement.