Property education consumers would have left the first creditors meeting of the National Investment Institute feeling more than a little gutted, not knowing whether they would ever see their money again.
Several hundred of Kaye’s former students, as well as other NII creditors, met in Melbourne yesterday hoping for good news that they would get back millions of dollars owed to them in refunds from Kaye’s now defunct property education business.
NII and fellow company Empower Group both sought voluntary liquidation late last month owing creditors tens of millions of dollars.
Unfortunately for Kaye’s former property investment students, the chances of getting refunds are not good, especially considering two of the secured creditors to any NII funds are Group Corporate Services and NII Group Holdings, which are owed a total of $16.8 million.
Both companies are associated with Henry Kaye.
Administrator Andrew Hewitt, of Grant Thornton, admitted things did not seem right with Group Corporate Services and NII Group Holdings claims, stating that he was “concerned with the validity” of the amounts.
He is still awaiting documentation on both debts.
Hewitt also says that Grant Thornton’s investigators were also still going through NII’s bank accounts to follow the money trail.
Another associated company Property Corporate Services owes NII $28 million.
Other unsecured trading creditors include associated companies Novasource; Empower and Group Corporate Services.
Many of Kaye’s property education victims spoke at the creditors meeting yesterday stating their bewilderment that all their refund claims had been rejected by the so-called independent NII “adjudicator”.
Earlier this year, NII was ordered by the Federal Court to repay course participants millions of dollars. It found the property education group had falsely claimed courses as being approved by the Australian Securities & Investment Commission.
In October, ASIC dragged NII and Kaye back before the Federal Court, alleging NII had breached the compensation provisions of the court’s previous enforceable undertaking order.
Hewitt said that as part of a deed of corporation Kaye could waive his rights to the outstanding $16.8 million owing to Group Corporate Services and NII Group Holdings by NII; however, Kaye gave no indication to creditors today that he would do so.
Another concern of the administrator was that whether Kaye and NII traded whilst being insolvent.
In a short, tightly- scri pted statement to creditors, Kaye apologised to former disciples. saying he was very sad.
Kaye says he is committed to maximising returns to the line of creditors, of which he is first in line.
Hewitt said Kaye had paid former NII employees all outstanding wages on November 25, but superannuation entitlements remain outstanding.
The main finance company behind Kaye’s education seminars, AFD has also indicated it could become a creditor of NII.
Meanwhile, across town only four of 71 former employees of the Empower Group attended its creditors meeting. Creditors in this company are owed around $735,000.
The next NII creditors meeting will be held on December 22, when Kaye victims may get some better news than they received yesterday.
