Failed New Zealand finance company Hanover Group has taken Chartis NZ to court in a dispute over directors’ and officers’ (D&O) cover.

Former Hanover directors want policy proceeds of up to $NZ20 million ($15.8 million) to fund legal costs, but there is a dispute over the extent of the cover.

The Financial Markets Authority (FMA) has started civil proceedings against six directors, seeking fines and compensation for investors who put $NZ35 million ($27.7 million) into the company in 2007 and 2008.

The dispute with Chartis, which issued the policy in 2007, revolves around whether cover was provided for the prospectuses of three Hanover group companies.

Auckland High Court has been told Hanover’s broker and AIG reached agreement on the cover over the phone.

Hanover has separately taken QBE to the High Court over a $NZ2 million ($1.6 million) D&O policy.

About 60 New Zealand finance companies failed or had to freeze repayments following the global financial crisis.

The scandal led to stronger regulation and the launch of the FMA. Action by the FMA and investors in cases such as Hanover’s and the Bridgecorp collapse has seen directors call on their D&O policies.

The Serious Fraud Office is investigating Hanover.