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]