Tony McGrath, the provisional liquidator for failed Australian insurer HIH, indicated that creditors of the bankrupt company may get only about 50 cents on the dollar.
New loss estimates have put HIH’s shortfall as high as $2.8 billion (See IJ Website August 28), and McGrath’s not optimistic about creditors getting even half of what they’re owed. In an appearance on a local television business program he reportedly indicated that as many as 2 million creditors around the world could be affected. He said he hoped to schedule a meeting with them in November to report on progress in marshaling HIH’s assets.
The ripple effect has caused problems far beyond Australia. U.S regulators are still resisting attempts by the liqudators to gain control over U.S. assets, claiming that U.S. policyholders have first claim on them. In Hong Kong the local Employees Compensation Fund has been drained dry by HIH claims and future payments to some 27,000 HIH clients are now in question.
Australian authorities are continuing their investigation of HIH founder Ray Williams and his associates Rodney Adler and Dominic Fodera. The Australian Securities & Investment Commission has brought charges against the three over their alleged mishandling of some US$ 5 million in a unit trust fund they controlled.
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