Australian Secured Investments Limited (Receivers and Managers Appointed) (In Liquidation) ACN ( ASIL )

Transcription

1 Australian Secured Investments Limited (Receivers and Managers Appointed) (In Liquidation) ACN ( ASIL ) First and final repayment and update to Debenture holders We refer to our previous updates to debenture holders and now provide you with a further update on the receivership of ASIL. This update covers the following matters: Background and treatment of ASIL debenture holders; Sale of lots 44, 45 and 47 Belangason Way, Shoal Point (the Property ); Allocation of sale proceeds and costs associated with the Property sale; Receivers and Managers remuneration summary; and First and final repayment to ASIL debenture holders. Background and treatment of ASIL debenture holders As you are aware, my partner Tony McGrath and I were appointed Receivers and Managers of ASIL by the secured creditor, Permanent Nominees (Aust.) Limited, on 21 August Mr McGrath and I were also separately appointed as Receivers and Managers of Hastings Capital Limited (Receivers and Managers Appointed) (In Liquidation) ( HCL ), a related company, on 20 August We note that HCL acquired all of ASIL s share capital in November 2007, following which ASIL s cash holdings of approximately $19 million were transferred to HCL. HCL applied these funds to: Pay interest and redemptions to ASIL debenture holders of approximately $13.3 million; and Reimburse itself for the funds HCL had advanced to Shoalpoint (Mackay) Pty Limited and Gee Forward Investments Pty Limited (together, the Shoalpoint borrower ) totalling $5.7 million (the Shoalpoint Loan ). In consideration of the ASIL advance to HCL in respect of the Shoalpoint Loan, HCL purported to assign to ASIL the principal component (only) of its loan secured by a first ranking real property mortgage over the Property. We note that, as at the date of our appointment the Shoalpoint loan was in default and the Property represented the sole security property available to repay ASIL debenture holders. Although ASIL s share capital was purchased by HCL, ASIL was and remained a separate entity to HCL. The reason that ASIL and HCL remained separate entities is because the Directors did not transfer the trust deed as contemplated in the acquisition of ASIL by HCL. The failure to transfer the trust deed means that the two groups of debenture holders are and remain separate.

2 Sale of lots 44, 45 and 47 Belangason Way, Shoal Point The Property consisted of three irregular shaped beachside and near beachside development sites in Shoal Point (near Mackay, QLD). We make the following comments with respect to the sales and marketing of the Property: On 23 March 2009, HCL (being registered mortgagee of the Property) took possession of the Property and offered it for sale via an Expression of Interest ( EOI ) campaign. No reasonable offers were received at this time. Subsequently, the Property was offered for sale via private treaty. A level of interest remained, however, no offers were received. In March/April 2010, we obtained an updated valuation and market outlook advice to assess the various realisation strategies available. Advice received indicated that due to low levels of current and projected demand for development sites within the region, there appeared to be little prospect of a significant improvement in market values in the medium term. In September/October 2010, we sought marketing submissions from agents within the Shoal Point and surrounding areas. In July 2011, we appointed LJ Hooker Mackay as marketing agents for the Property. At this time we obtained an updated valuation in respect of the Property. On 16 September 2011, following an extensive national marketing campaign, the Property was sold at auction. Lot 44 and 45 at the Property was settled on 17 October 2011, achieving a combined sale price of $693,000 (GST inclusive). Lot 47 at the Property was settled on 15 December 2011, achieving a sale price of $869,000 (GST inclusive). Allocation of sale proceeds and costs associated with the Property sale As previously advised, the sale proceeds from the Property have been allocated to ASIL and HCL in accordance with the value of the total loan compared with the principal and interest components of same. This results in 75% of the sale proceeds of the Property (less costs) attributable to ASIL and the remaining 25% of the sale proceeds (less costs) attributable to HCL. Separately, the costs associated with maintaining, monitoring and realising the Property have been allocated to HCL and ASIL on a 50/50 basis. This allocation recognises each party s interest in the Property whilst taking into consideration the additional costs expended by HCL with respect to their claims against the Property borrowers and guarantors (which HCL maintained sole benefit of). Please find attached as Annexure A a summary of the Receivers and Managers receipts and payments from the date of our appointment on 21 August 2008 to 18 October We note that Annexure A incorporates the allocation of sales proceeds/cost as discussed above. Remuneration In accordance with the Insolvency Practitioners Association of Australia s Best Practice Guide, our remuneration is based on time incurred, calculated on the rates set by McGrathNicol (less a 10% discount). The remuneration incurred for the period from 21 August 2008 to 30 September 2012 is as follow:

3 Remuneration Period Hours Total $ (GST Excl) 21 August 2008 to 4 January ,070 5 January 2009 to 3 July ,940 4 July 2009 to 31 December ,467 1 January 2010 to 30 June ,868 1 July 2010 to 31 December ,090 1 January 2011 to 30 June ,760 1 July 2011 to 31 December ,747 1 January 2012 to 30 June ,955 1 July 2012 to 30 September ,007 Subtotal ,904 Less 10% (discounted rates) (26,390) Total 237,514 Debenture holders should note that the above schedule of remuneration includes approximately $55,000 of time costs incurred by HCL on behalf of ASIL (in dealing with the Property). This amount has been reimbursed to HCL (as part of the cost allocation process). Further, we note that approximately $66,000 of the above remuneration remains unpaid. The table at Annexure B sets out the key tasks attended to during the receivership of ASIL. We acknowledge the significant costs of the receivership and advise that the remuneration is reflective of, amongst others, the significant time incurred in working through the various issues associated with realising the underlying security property and dealing with the transaction between ASIL by HCL. First and final repayment to ASIL debenture holders Please find attached a cheque (in respect of each of your accounts with ASIL) representing your entitlement to the first and final repayment to ASIL debenture holders calculated at the rate of 7.5 cents in the dollar on your total investment balance as at 21 August 2008 (the date of our appointment as Receivers and Managers). As the sole security property available to repay ASIL debenture holders has now been realised and its proceeds distributed, it is our intention to retire as Receivers and Managers of ASIL in the near future. We thank you for your patience and ongoing co-operation in this matter. Should you wish to discuss any aspects of the above, please do not hesitate to contact the Receivers debenture holder liaison representative, Mr Mitchell Peasley on (02) Dated 5 November 2012 Joseph Hayes Receiver and Manager

4 Annexure A Summary of Receivers and Managers' Receipts and Payments for the period from 21 August 2008 to 18 October 2012 Particulars Total $ Receipts Cash at bank on appointment 18,867 Sale of lots 44 & ,052 Sale of lot ,351 Interest income 7,321 Other income 67 GST received 10,903 Total receipts* 1,226,561 Payments Bank charges (124) Council rates (65,080) Land tax (89,439) Removal of charge fee (66) Sales commission (15,620) Advertising for sale (9,779) Insurance (2,861) Mail and postage (967) Server hosting fees (11,329) Valuation fees (14,823) Consultancy fees (21,706) Trustee fees (120,989) Legal fees (37,559) Legal expenses (464) Reimbursement of remuneration incurred on behalf of ASIL and paid by HCL (54,693) Receivers and Managers remuneration (138,411) Receivers and Managers expenses (1,241) Other charges (1,196) Withholding tax (386) GST paid (108,069) Total payments* (694,802) Cash at bank as at 18 October ,759 * Note: Debenture holders should note that a large portion of the above receipts/payments were received/paid by HCL and subsequently reimbursed by/transferred to ASIL (following realisation of the Property).

5 Annexure B Summary of key tasks attended to during the receivership of ASIL Debenture holders Regular liaison and ongoing attendance to debenture holders' enquiries regarding the receivership; Attendance to the preparation and distribution of 9 circulars to ASIL debenture holders; and Preparation for and distribution of the first and final repayment to ASIL debenture holders at the rate of 7.5 cents in the dollar in October Property strategy Ongoing liaison with property valuers with respect to obtaining regular valuations of the Property; Liaison with consultants in respect of obtaining a market outlook report in relation to the Property; and Liaison with borrowers, marketing agents, legal advisors and various interested parties in relation to the Property. Sale of property Consideration of realisation strategies for the Property, including liaison with marketing agents to obtain marketing submissions and consideration of the most appropriate marketing agents to appoint; Attendance to two sale campaigns for the Property in May 2009 and August 2011; General oversight of the sale campaigns, involving regular liaison with the marketing agents, auctioneer and interested parties and review and approval of advertising material; Detailed review and approval of sales documentation, contracts for sale and ongoing liaison with legal advisors with respect of same; and Attendance to the settlement of lots 44 and 45 of the Property in October 2011 and lot 47 in December Investigations Investigate the circumstances surrounding the HCL/ASIL transaction, including obtaining legal advice with respect to the rights of each party to the sale proceeds of the Property and considering various solutions to deal with same; and Preparation of a report to and liaison with the Australian Securities and Investment Commission regarding the conduct of the ASIL directors prior to our appointment. Statutory/general matters Preparation of detailed calculations with respect to the allocation of sale proceeds between HCL and ASIL debenture holders; Investigating the taxation treatment of ASIL debenture holder repayments including seeking legal advice with respect to same; Attending to general receivership issues including the preparation of statutory lodgements with the Australian Securities and Investment Commission; Preparation and lodgement of business activity statements with the Australian Taxation Office; and Attendance to ongoing banking requirements. Liquidation Liaison with the Liquidators regarding the status of the liquidation of ASIL. Reporting to Trustee Regular reporting to and liaison with the Trustee for debenture holders.