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LM Investment Management - Lack of confidence

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So Ripe, So Ripe

RODENT69 said:
Attached for the information of LM Wholesale First Mortgage Income Fund investors -(LMWFMIF ) is the long delayed 2012 FY audited report from Trilogy

Investors should note closely the Ernst &Young comments regarding Material uncertainty & Distribution Income View attachment 52152,
Click to expand...

Good afternoon Rodent, Thanks for posting the document. I think the (income) distributions are a goner - and I wonder if you're surprised about the "material uncertainty"? Every damaged fund gets that little spiel. I think it's fair to say that you'll all be lucky if you get a capital return of between 15% - 20% (going on past performances of similar funds). Remember, the loans were all over 90 days in default and at 100% LVR. I'd bet there's a number of readers who're still optimistic about the unit value, but let's not get any unit price declared from time to time confused with what may be the actual outcome for investors.

I didn't know whether to laugh or cry when I saw the management fee values - what a setup !!! oh well, scheme. To make so much money, nearly $2m merely to gather up punters' hard-earned and push it over to one single entity (LMFMIF) where there's yet another fee to be gleaned (as well as receiving fees (as receiver) for the failed loans the manager itself made - the added reward for failure) wow ! There's something that just doesn't sit right about that sort of deal - yes, it's legal, but ....

Oh dear .. the $$$$$ .. no wonder there's a "Dash For Cash" - so, ripe these damaged funds, so ripe.

Now Trilogy has a lovely earner, even at of 0.5% of value (plus GST) - of course, fees made while the fund has a relatively high value will "magnify" as the fund drops and starts to distribute funds to investors. That is, management fees will end up as a greater % of those funds actually returned over time, especially if the whole thing drags out for a few years - If your fund continues to pay a fee to Trilogy, then I'm sure you'll all get what I mean as time passes.

Trilogy must have been beside themselves when they took over management of the fund - what a dream outcome.

Did you all get a BIG :thankyou: from Trilogy?

So much for so little to do.

As they say "no sweat", yes, "now sweat" indeed.
 
Last edited by a moderator:
SUMS DON'T ADD UP FOR MADDISION
Quentin Tod
Gold Coast Bulletin
13 May 2013


Page 48 today's Gold Coast Bulletin... The Maddison figures are eye watering in that veteran Gold Coast Developers estimate the sale value of the site at $20 Million Dollars at today's values.


"The ‘‘folly’’ of LM’s grand Maddison plan becomes evident when it’s realised that to achieve a $1.6 billion end value, the mooted 1500 homes would have to average more than $1 million each. Chop the plan back to 800 lots, and the homes would have to be worth $2 million each.
The big question, of course, is where’s the $200 million-odd that’s been added to the original Arrowtown borrowings by LM and Suncorp.
Paying consultants and pushing dirt around for three or four months isn’t that expensive.
Someone has a lot of explaining to do, especially to the sorry investors who appear set to lose lots of lolly on Drake’s Folly."
 
Similar hallmarks to Mark McIvor's folly in Ipswich with bankrupt "King Con" on behalf of innocent Equititrust investors... In a similar vein where did the money go ??

Yet McIvor and Drake both had the obligatory beachfront pads... Who really paid for them, that is the question...
 
Reality / Media / Class Actions

No Trust said:
SUMS DON'T ADD UP FOR MADDISION - Quentin Tod - Gold Coast Bulletin 13 May 2013 Page 48 today's Gold Coast Bulletin... The Maddison figures are eye watering in that veteran Gold Coast Developers estimate the sale value of the site at $20 Million Dollars at today's values.

"The ‘‘folly’’ of LM’s grand Maddison plan becomes evident when it’s realised that to achieve a $1.6 billion end value, the mooted 1500 homes would have to average more than $1 million each. Chop the plan back to 800 lots, and the homes would have to be worth $2 million each. The big question, of course, is where’s the $200 million-odd that’s been added to the original Arrowtown borrowings by LM and Suncorp. Paying consultants and pushing dirt around for three or four months isn’t that expensive. Someone has a lot of explaining to do, especially to the sorry investors who appear set to lose lots of lolly on Drake’s Folly."
Click to expand...

I don't think the $1.6 billion spruik is anything to bother about, I mean from both the Gold Coast Bulletin and LM, but the $20m estimated value really something for LM MPF investors to concern themselves about. That's a hell of potential loss to face. It's going to be hard to KM to be optimistic about "Maddison" in the face of these sorts of reports.

The big question will be, "Will KM keep the dream alive, or will they sell and return capital to investors?" - really big $$$ for KM if they develop - far, far less if they sell. Let's see.

http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html

Michael West reported (in part), "In the MPF’s December 2012 update, the largest loan in the fund was to a development on the highway between Brisbane and the Gold Coast called Maddison Estate. This loan was for $234 million and it makes up some 62 per cent of the entire commercial loan portfolio of the fund.

Bizarrely, this $234 million is the second mortgage, ranking behind Suncorp which holds a $20 million mortgage. The second mortgage is registered to a Coomera Ridge Pty Ltd, of which Peter Drake is sole director.

To distil, more than half of investors’ money in this particular LM fund has been directed into a loan to a property development company controlled by Peter Drake.

The mortgagee for Maddison Estate is Maddison Estate Pty Ltd, a company of which Peter Drake is the sole director and which has one shareholder. That shareholder is LM Coomera Holdings Pty Ltd which also has a sole director, Peter Drake, and one shareholder which is LMIM Asset Management Pty Ltd, which also has one director, Peter Drake, and one shareholder, Peter Drake." (emphasis added)

By reference to the affidavit of Simon Michael Vertullo sworn 8 May 2013 pp. 211 - 212, the second mortgage holder is LM Coomera Pty. Ltd. (now Maddison Estate Pty. Ltd.):
https://connectonline.asic.gov.au/R...ext=lm coomera pty ltd&searchType=OrgAndBusNm

Coomera Ridge Pty. Ltd. is the registered owner.
https://connectonline.asic.gov.au/R...rchText=coomera+ridge+&searchType=OrgAndBusNm

Nevertheless, it seems "Maddison" is the MPF's "Martha Cove" the PFMF asset on which PFMF investors stand to lose well over $100m - and "Seven Mountains" where the PFMF lost about $200m - see some information about "Seven Mountains" here: http://www.mauriceblackburnnsw.com....tions/current-class-actions/city-pacific.aspx

And while on the subject of litigation, LM investors shouldn't be thinking they'll each recover all their respective losses in a class action - how about $0.0125/unit? It's easy to get a general idea, divide (Max claim value) by number of investors and subtract the funder's share : -

eg. a successful claim would yield (assume limit of insurer's potential liability = $20m, ($20m / 800m ( for example - but in any event, all investors in all funds)) = $0.025/unit -- If the funder takes 50%, there's a potential $0.0125/unit (more if the take for the funder is less). So, it doesn't matter if the actual court claim was, say, $200m, there's nothing likely to be recovered in excess of the maximum limit of the insurer's liability.

My guess is that there's about $0.01/unit (or so) if everything runs to plan. Sure, better than nothing, but a much better outcome if the funds run the cases themselves (could be up to twice the return).

[the estimate would apply if potential claims are limited to those against LM and/or directors]
 
Beyond belief that this could happen, yet we have seen the same scam pulled by McIvor at Equititrust in his dealings and intermingling of private and corporate interests. Both Gold Coast companies and individuals and both now bust...

Where was the regulator ??? Ignoring the complaints that were made... ASIC were forewarned about McIvor and yet did nothing. If they had acted at the time and prevent loans to the likes of King Con many investors would have been saved...

Maddison really was a ill thought out development by someone with a big ego but no development credentials very much like McIvor's delusions of development expertise... McIvor was not a survivor and is now a bankrupt...
 
Trilogy - PFMF Selloff?

Trilogy seems to be looking to the end of the PFMF.

Asset sales/auctions at Martha Cove, Braeside, Carrara, and Grande Pacific.

This'll mean a reduced management fee from the PFMF - I really don't know what precipitated these fund assets sell-offs, but I (for one) will be pleased to see the end of Trilogy (and Balmain) and the PFMF and see any crumbs returned as soon as possible.

Some links are on the front page of http://www.moneymagik.com/

My guess is that the reduced fee from the PFMF will mean a Trilogy hungry to see $$$ come from LM funds.

It'd be much nicer an outcome if Trilogy was to remain hungry, that's for sure.

[Trilogy doesn't seem to be mentioned in any media release relating to PFMF assets]
 
Representatives In the Mix?

ASICK said:
Compliments of Mr. Google:

http://www.kordamentha.com/docs/au_109_lm/14-submissions-of-lmim.pdf?sfvrsn=2

particularly see page 7, paragraph 21

Qld Supreme Court Registry File: http://apps.courts.qld.gov.au/esear...Location=BRISB&Court=SUPRE&Filenumber=2869/13
Click to expand...

And which law firm represents the side seeking to have Trilogy appointed as RE to the LMFMIF?

Why, it's Piper Alderman.

I wouldn't be surprised to see the same argument re: Piper Alderman against Trilogy's run for the LMFMIF as in the case of KordaMentha re: LMMPF.

As least to me, it doesn't look good when lawyers representing one side become part of the mix, and it seems to me that's exactly where Piper Alderman has placed itself, fair and square in the middle of the "Grab for Cash".
 
Trilogy: BEGONE !

Taja said:
FTI has posted this 17th May update on its website, regarding the 30th May investor vote (which may be postponed) on Trilogy vs FTI control over FMIF, and giving an opinion on the litigation around FMIF.
View attachment 52253
Click to expand...

Thanks Taja.

It's great how so much information has come available to both LM and PFMF members as a consequence of the present litigation.

http://www.moneymagik.com/ has some information (re: Kosho v. Trilogy) which has been disclosed in an affidavit from the present proceedings.

http://moneymagik.com/lm_investment_management.php has been updated with easy links to Piper Alderman, the court registry, FTI, ASIC, and KordaMentha.
 
FEES & OTHER THINGS

Notes:
LM (in administration)
All emphasis added

The Impost of Multiple Fees

LM says, in Annexure "A", Table, (2) Shotton, "This involves an unnecessary layer of cost" http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

LM says, in Annexure "A", Table, (3) ASIC, "Reasons provided above in Shotton application." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

Piper Alderman, "In Equititrust, the RE remained with liquidators in control and receivers in control of the assets with two sets of fees being incurred and sought to be recovered from that Fund." http://s.webtemplate.com.au/bridgehead/PiperAlderman/media/files/10851.pdf

Interesting spruiks, but is there any validity to them? I don't think there is. As I understand it from "No Trust", the Equititrust Limited's liquidator (Hall Chadwick) has twice stated that it has no intention to seek its fees from the Equititrust Income Fund (EIF) yet filed an application for directions with the court.

4 January 2013: David White (BDO), receiver to the EIF says this, "2.3 Claims by the Liquidators of EL - The liquidators of EL, Hall Chadwick, have lodged an application for directions with the Court in relation to the extent to which they are entitled to be indemnified out of EIF's assets for remuneration and expenses incurred by them as Administrators totalling approximately $805,000. Their application is scheduled to be heard in February 2013, however as they failed to meet the deadline to serve the application on me then the hearing is likely to be adjourned.

I have previously queried the basis of their claims and their right to claim against the EIF's assets and bearing in mind:

o I was already appointed to wind up the EIF at the time of their appointment and was the Receiver of the EIF's assets;
o The statements made by Richard Albarran at the first meeting of creditors where he advised investors of the EIF that his costs and expenses would not come out of the Fund;
o The Court Order of 29 February 2012 (which the Administrators consented to) and which clarified the roles of the various insolvency practitioners in order to save the duplication of costs; and
o Richard Albarran's confirmation at the second meeting of creditors that if Halt Chadwick were appointed Liquidators of EL they would not seek reimbursement of any costs from the EIF as Liquidators."

18 April 2013: David White (BDO), receiver to the EIF says this, "2.3 Claims by the Liquidators of EL - As advised in my eleventh report to investors, the liquidators of EL, Hall Chadwick, lodged an application for directions with the Court in relation to the extent to which they are entitled to be indemnified out of EIF's assets for remuneration and expenses incurred by them as Administrators totalling approximately $805, 000. Hall Chadwick has still not filed the application for directions. It is therefore unclear if this will proceed."
http://equititrust.com.au/Pdfs/Receiver/Receivers Reports - 20130418 - 12th Report to Investors.pdf

Piper Alderman, "We do not believe this is a case like Equititrust where the RE cannot be changed without penalty to the LMFMIF accordingly we think that approach is not appropriate in respect of the LMFMIF." http://s .webtemplate.com.au/bridgehead/PiperAlderman/media/files/10851.pdf

Members of LM funds should contact ASIC and seek clarification that any order sought would specifically include the prohibition of costs duplication. For my part, I'm confident that the court will not permit any manager to draw a fee while a receiver is winding up the fund - to my mind, on the appointment of a receiver to a fund, a manager has no fund to manage, and is no longer entitled to its fees.

My guess is that Hall Chadwick hasn't proceeded in the court because it's unlikely to succeed.

The problem for LM investors receiving this nonsense about duplication of fees is that it's likely to influence their decision making - and I think that such influence is unfair. ASIC should bring a halt to this immediately else this issue alone has the potential to skew the outcome in the courts (since LM is going to use the outcome of its "Clayton's Meeting" as evidence that LM should win the 'Dash for Cash').

I think LM members should press ASIC to speak to the issue of "duplication of costs" - don't ignore it, get it out into the open, and get it resolved.

LM says, in Annexure "A", Table, (2) Shotton, "If the Court appoints a Receiver it is possible that the Secured creditor may appoint their own Receiver, resulting in several Receivers from different firms being appointed – who will all be paid from member funds." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

LM says, in Annexure "A", Table, (3) ASIC, "Reasons provided above in Shotton application." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

scare tactics. keep in mind that ASIC's in the mix now.

LM says, in Annexure "A", Table, (2) Shotton, "· Secured creditor has authorised capital distributions to members;
· If Receivers were appointed this situation may change; and if Mr Shotton’s submissions were adopted, capital distributions would cease for a significant time, most likely up to 18 months." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

I think Mr. Shotton's on the right track. Investors should push which ever entity is in charge to get rid of the bloody bank - Deutsche Bank's influence is too great for it's petty contribution. Pay the bank out, get rid of it - in any event, the interest being charged is obscene.

If LM stays in control it (and LM creditors, including advisors) will benefit for the facility debt with Deutsche Bank. Remember, the manager's fee is calculated as a % of FUM (which included debt). As I see it, if investors are paid back capital, they don't think of the impost of obscene fees on a bank debt, or indeed, the control given the bank by virtue of the debt. However, if the debt is paid down first, punters will still want capital return - the latter situation will mean FUM will drop faster than the former, and consequently a reduced fee return for LM.

I think LM investors should not delude themselves into thinking they'll be the winners if capital is returned before the facility debt is paid down - actually, it's quite the contrary, they'll lose out. Further, as has been exhibited by Trilogy's repayments of capital to PFMF investors (prior to repayment of the CBA facility), in the end, the facility provider will eventually pull the manager up and force repayments, and fire sales - there is no other way around it when the value of the fund drops viz-a-viz the value of the facility debt.

The Meeting

LM says, "LM has encouraged Trilogy to provide Members with information to assist them make a decision as to whether to vote for the resolutions to see Trilogy replace LM as Manager of your Fund."
http://u.b5z.net/i/u/10199052/f/8974r15__WFMIF__Compiled.pdf

I'm curious to know why LM has purposely avoided speaking to Trilogy's failures (except PFMF) and Trilogy's Philip Ryan's breach of trust:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

LM says, "LM does not believe that the power of the Court to appoint a temporary or replacement manager can or should be exercised in the circumstances relied upon by Trilogy in its Court application."
http://u.b5z.net/i/u/10199052/f/8974r15__WFMIF__Compiled.pdf

Of course not, remember, it's the "Dash for Cash".

In the case of an attempted takeover of Wellington Capital's (WC) Premium Income Fund (PIF), WC had proceedings on foot which were ignored by Castelreagh Capital:
http://www.couriermail.com.au/busin...led-for-thursday/story-e6freqmx-1226079456192
"Castlereagh head of funds management Philip Armstrong yesterday accused Ms Hutson of "an act of desperation to stop a process" in which the voting so far has gone strongly against Wellington. ... Mr Armstrong said the likely adjournment of tomorrow's meeting would cost thousands of dollars and inconvenience several hundred investors planning to attend. "They just want to have their say," he said."

Well, the meeting was adjourned, and WC was successful with its court proceedings. Even if Castlereagh was successful at the meeting, the meeting would have failed because of WC's success in court. I confess I was stunned (at the time) as to why Castlereagh didn't call off the meeting until the court's judgment.

Since Castelreagh decided to proceed with the meeting in the face of court proceedings, it seems Castlereagh was the one which caused the "cost of thousands of dollars" as well as the inconvenience to members.

In my view it is a foolish act indeed to ignore court proceedings afoot - I'm sure both WC and Castlereagh are aware of that - is it something LM is about to learn?

LM Says, "I intend to provide the result of the meeting and the votes showing whether Trilogy has support or not, to the Court. I therefore strongly recommend that investors cast their proxies to show whether they are in favour or against Trilogy being appointed as manager of the Fund."
http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

If there was ever a self-interested act, it would have to be LM's call for a meeting. Does anyone seriously think that the court will allow a proceedings on foot to be disturbed by a meeting of fund members? Now you all know my views about Trilogy, but I think Trilogy is right to ignore the meeting - I think the reality is that the meeting is no more than an attempt by LM to influence the court by the result of a meeting of ill-informed members of LM funds. Just as in the WC/Castlereagh matter, I think it's foolish for a party to persist with a meeting with court proceedings under way. I would be surprised if LM isn't well aware of the WC/Castlereagh matter.

I think, just as in the WC matter, any meeting held by a LM fund at this time will be deemed invalid by the court, even if Trilogy did participate, and if so, what a waste of resources and time!

I most certainly hope that the judge slams LM and adds, "Did LM for the meeting? If it didn't, then it should"

Worth a read: http://www.wellcap.com.au/assets/pi...itholdermeetingdeclaredinvalid_13july2011.pdf

[note: I'm not a fan of WC, but the facts are the facts]
 
Re: The "Dash For Cash"

ASICK said:
It doesn't appear (at least to me) that the investors disclosed in Mr. Baltins' affidavit as supporting Trilogy could, to any extent, be regarded as well informed.
Click to expand...

So yesterday I received three separate letters regarding LM and RE voting, all by snail mail:

1) Trilogy Update / Piper Alderman Indication of Support for Trilogy form, dated 19th April
2) FTI Circular to Investors / LM Investor Update, dated 25th April
3) LM Voting Direction Form / FTI Circular to Investors, dated 1st May

Whiles I don't doubt my local postal service is responsible for some of the delays, why are these parties communicating by letter? It's not as if they don't have email addresses for investors. As this issues should be more important to the poor investors, rather than the vultures, why don't they communicate in a more efficient method which would allow investors to have a say, particularly as many investors are based overseas.

It's almost as if they didn't want investors to become involved in the issue, or to be properly informed about other options, thereby possibly thwarting their dash for our cash. Anybody else get the same feeling?
 
Court File: The File Has Been Trimmed

Seems the court file for the Bruce application has been trimmed from about 7 May 2013.

There was an amended application and a number of affidavits listed - all of which did not make it to either of LM's or PA's websites - those documents are no longer listed on the court file.

http://moneymagik.com/lm_investment_management.php
(see the table headed "Current Litigation")

I wonder if there's some cracks showing up somewhere?

Maybe just some court housekeeping going on?
 
Re: Court File: The File Has Been Trimmed

ASICK said:
Seems the court file for the Bruce application has been trimmed from about 7 May 2013.

There was an amended application and a number of affidavits listed - all of which did not make it to either of LM's or PA's websites - those documents are no longer listed on the court file.

http://moneymagik.com/lm_investment_management.php
(see the table headed "Current Litigation")

I wonder if there's some cracks showing up somewhere?

Maybe just some court housekeeping going on?
Click to expand...

nope .. they're there .. just out of order ... dates all over the place
although the amended application doesn't seem to be there any more.
(now why didn't I think of that?)
 

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