The Supreme Court of Queensland has ruled that the $400 million LM First Mortgage Income Fund be wound up by FTI Consulting, which is the administrator of the fund manager, LM Investment Management.
The move follows a blow to rival fund manager Trilogy, which had applied to the court to be given the task of winding up the fund after failing to convince investors to hand it the reins last year.
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Consequently, the Court has dismissed Trilogy’s application to become responsible entity of the LM First Mortgage Income Fund.
The court has appointed David Whyte of insolvency practice BDO as a receiver to wind up the fund.
A court decision to have the fund wound up signals the beginning of the end for Kiwi investors waiting to find out the fate of their money.
New Zealand investors in the fund saw redemptions frozen in late 2009 and have had to watch the unit price plummet from A$1 to A55c.
Justice Jean Dalton said: "The conduct of the first respondent, FTI on behalf of LM, was "combative and partisan. My view is that they have preferred their own commercial interest to the interests of the fund."
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By GlobalDataGreg Tanzer, Australian Securities and Investments Commission (ASIC) commissioner, said: "The appointment will see the winding up proceed in the most efficient and cost effective way. We want to see the maximum returned for investors."
FTI senior managing director Ginette Muller said: "Although we feel vindicated that the judge ruled against this, we are disappointed to have been criticised for the actions we undertook which we believed were in the best interests of members."
