Ruling clears way for insurer to keep €25 million paid before liquidation
The Court of Appeal has ruled that Alpha Insurance A/S can keep €25 million CBL Insurance paid it days before entering liquidation.
In Alpha Insurance A/S (in bankruptcy) v Johnstone [2026] NZCA 438, released 14 September 2026, the court overturned a High Court decision that had set aside three payments from CBL Insurance to Alpha Insurance as voidable transactions under the Companies Act 1993 (the Act).
CBL Insurance, a licensed New Zealand reinsurer under Reserve Bank oversight, made the payments in February 2018, days before the Bank applied to put it into liquidation. They included a €25 million payment under a liability settlement agreement and a £397,000 payment under a reinsurance treaty. The liquidators later sought to void the payments, arguing that CBL Insurance could not pay its due debts when it made them.
The dispute centred on CBL Insurance's outstanding claims liability (OCL) – an actuary's estimate of what the insurer would eventually pay on claims. Under s. 292, that turns on whether a company can pay debts as they fall due. The High Court found that the whole OCL counted as a due debt under that test, and held that CBL Insurance could not pay its due debts. It set the payments aside.
The Court of Appeal disagreed. It found that some OCL claims, including those CBL Insurance had already been told about, were due debts. But it said claims not yet reported could take more than a decade to surface, so they were too far off to count. Applying the Supreme Court's test in David Browne Contractors Ltd v Petterson, the court held that only debts due within a reasonably proximate period should be treated as due debts.
The court also rejected the liquidators' argument that CBL Insurance's liabilities should all be treated as due because its liquidation was inevitable at the time. It found that inevitability did not accelerate when debts fell due.
On the evidence, an actuary estimated CBL Insurance could have kept paying claims for three to five years before running out of cash. The Court of Appeal found that period fell outside what was reasonably proximate, meaning Alpha Insurance had proved CBL Insurance could pay its due debts when the payments were made.
The Court of Appeal allowed the appeal and set aside the High Court's orders. It ordered the liquidators to pay Alpha Insurance's costs of the appeal on a standard band A basis and sent the High Court costs question back to that court for redetermination in light of the judgment.
