Failed New Zealand broker Herbert Insurance may have broken the law, the company’s liquidator has found.

Aaron Walsh of Corporate Finance Ltd says he has not taken further action pending the outcome of a Serious Fraud Office (SFO) investigation into Herbert.

The SFO is close to finalising the investigation it began shortly after Herbert went into liquidation in March last year, when concerns were raised about an apparent shortfall in the client premiums account and whether premiums had been passed on to insurers.

Secured creditor ASB Bank appointed receivers KordaMentha, which sold Herbert’s 4000-strong client book to Aon. The sale will be finalised this month when the price will be determined.

Corporate Finance’s second report into Herbert says the liquidators are working with insurers to determine who is entitled to funds in two trust accounts. 

One insurer has received all the funds from one account, although this did not discharge all the insurer’s claim on that account. Talks continue with other insurers on entitlements to funds in the company’s premium account.

Mr Walsh says the liquidators have identified potentially voidable transactions and disposition of assets via “unusual fund transfers”.

The liquidators are assessing the likely benefit to creditors in pursuing recovery action and says appropriate authorities have been notified.

Herbert’s receivers have said ASB Bank might get some distribution for the $NZ780,000 ($619,000) it is owed, but not enough money will be recovered to meet the claims of preferential and unsecured creditors.

Unsecured creditors are owed about $NZ200,000 ($159,000) and the Inland Revenue Department has a preferential creditor’s claim of $NZ314,000 ($249,000).