Allied accuses Hanover of breaching agreement

Allied claims Hanover failed to administer its assets in the usual and ordinary course, didn't consult in relation to proposed transactions and didn't dispose of finance assets without getting prior consent, it said in a statement to the NZX.

Hanover also failed to enforce the terms of any contract assumed by Allied, not to enter any abnormal or unusual transaction which adversely impacts on assets and to apply cash generated after June 30 last year only to specified costs or to pay it to Allied, it said. 

The claims, which Allied says exceed $5 million, mean the finance company won't pay Hanover $5 million today under the terms of the agreement, nor will it meet any future obligations. That comes after Allied wrote down the value of the loan books by about two-thirds to $124 million. In 2008, the Hanover and United assets were valued at $516.6 million.  

"The claims relate to a number of transactions where we have been unable to ascertain any sufficient commercial rationale or benefit to Hanover, including the release of personal guarantees and the sale of assets at what Allied considers to be less than market value," managing director Rob Alloway said in a statement.