The Federal Court of Australia has appointed a liquidator to an unregistered managed investment scheme involving the McKinnon Mews Hostel and Primelife Corporation.
The Court has appointed Colin Nicol of McGrath Nicol as liquidator of the Scheme and trustee and manager of the Kastabon and Novena Syndicates, which are partners to the Scheme.
ASIC sought the appointment of a liquidator after the independent accountant found omissions and deficiencies in the Scheme accounts; potential conflict between members about their contributions to the Scheme, and disputed liabilities between the manager of the Scheme and Primelife.
“The appointment of a liquidator is not a step ASIC takes lightly,” ASIC’s executive director of Enforcement Jan Redfern said.
“ASIC supported Court orders that gave parties and members of the scheme almost 10 months to come up with an alternative method to wind up the scheme but, given the findings of the independent accountant, there were no suitable alternatives.
“In the end, all parties agreed to the appointment of the liquidator,” Redfern added.
Primelife’s managing director Jim Hazel said there are only six out of 23 investment schemes relating to Primelife facilities or developments to go through the winding up process.
“The management team of Primelife has every expectation that the remaining schemes will be finalised in this calendar year,” he added.
The Court reserved its decision about preventing a Primelife subsidiary from rescinding or terminating a contract of sale. Rescission may have the effect of investors forfeiting their deposit on the purchase of the property. The restraint was sought for a period of time to enable the liquidator to determine whether he should bring proceedings in relation to the property.
“ASIC will continue its endeavours to ensure investors in these schemes obtain both proper disclosure and protective rights over the assets of the schemes,” she added.
Redfern reiterated that ASIC’s proceedings should not cause any disruption to the residents of the retirement villages and aged care facilities operated by Primelife, including McKinnon Mews.
Yesterday’s decision follows a two year long proceedings brought by ASIC on September 23 2004.
ASIC filed 37 proceedings in the Federal Court of Australia seeking, amongst other things, orders that an Independent Accountant be appointed over each of the schemes to report to the Federal Court to ascertain the position of each of the schemes. ASIC also applied for the schemes to be wound up. ASIC filed two further proceedings on June 22, 2005.
ASIC alleges that the schemes are not registered, as required under the Corporations Act. ASIC brought the Federal Court proceedings against Primelife and a number of other defendants including parties who, ASIC alleges, have been involved in promoting and managing the schemes to a large number of investors since 1997.
ASIC entered into terms of settlement with Primelife in the proceedings on April 01, 2005, however in several cases the proceedings against the other defendants are ongoing. ASIC has now finalised 12 of the proceedings, involving the winding up of six schemes.
There are a further 12 proceedings where orders have been made for the winding up of the relevant schemes and either the Independent Accountant is preparing his report or the parties are formulating proposals for the manner in which the schemes should be wound up.
By Kathryn O’Meara
