Australian (ASX) Stock Market Forum

LM Investment Management - Lack of confidence

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bigheadache said:
Suncorp sold their loan, not the title deed. According to the weekend newspaper Sunland paid less than 80c in the dollar, so let's say $17.6m for the $22m reported face value. If Sunland take possession of the property and sell it, they would be entitled to the first $22m + expenses with MPF getting anything above that.

It can't be a good sign for the valuation of Maddison estate if Suncorp are supposedly in the box seat and still willing to take a 20% loss just to get out. Ideally you'd want the second mortgagee (MPF) to take out the first mortgagee to protect their position and maximise a return by further developing the property. However, can you imagine the cheek of a financial adviser going back to their client and asking for more money to put in the MPF.
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Pretty much the same thing, they are now in control, the MPF fund is irrelevant to what they want to do.

A second mortgage of $250m or thereabouts, whoever thought that was a good business venture?

Unless it was just about getting your hands on the money, anyone's guess really!
 
Re: LM Investment Management - Drake Cashing In?

Drake's beach hut is to be auctioned off, according to this link:

http://www.goldcoast.com.au/article/2013/08/06/455858_gold-coast-news.html

I wonder who put it there and where the proceeds will go? Is there a mortgage on this property from LM?

Would hate to see Drake come back and buy it cheaper at auction, probably with the loan he ran off with shortly before the collapse. Seen similar things happen before......
 
So you can all see the debacle that LM has turned into and who is literally feeding off the carcass, you can read it here in the Supreme Court judgement handed down today:

http://archive.sclqld.org.au/qjudgment/2013/QSC13-192.pdf

Summary?

Trilogy didn't get the job because it manages things - not winds them up and a winding up is what is needed.

FTI and their lawyers were treated very unkindly - and it is very unusual for such comments to be made by a judge about people who are known as officers of the Court. A few of the harsher ones:-

Para 86 'In my view it is plain that calling the meeting was a tactic by the first respondent which had the aim of seeing off its rival for control of FMIF.'

About the meeting in para 87 'I cannot understand why a responsible entity acting solely in the interests of members would not attempt to accommodate or moderate its position in light of those arguments and the objective facts.'

In 89 'in my view the conduct of the first respondent in this litigation was combative and partisan in a way which I see as reflective of the administrators acting in their own interests to keep control of the winding-up of the FMIF, rather than acting in the interests of the members.'

Paras 90, 91 and 92 ending with 'It seems an extravagant use of members‟ funds' on an affidavit

Para 94 on the lawyers work that 'was little more than combative and querulous commentary on the litigation.'

Para 95 which includes this gem 'Ms Muller‟s affidavit ... is characterised by the sort of sniping and argumentative passages which one would hope not to find in any affidavit, let alone an affidavit of someone who is an officer of the Court and a trustee acting on behalf of others'

Para 116 'I do not have confidence that the administrators would adequately identify and deal fairly with conflicts if they were to arise.'

And at least there might be something in it for unit holders at para 128

'Fees to date have not been charged, but it is sworn that as at 27 June 2013 the administrators propose to charge the fund $960,756 and an unspecified part of $1,174,399 they have notionally charged to the first respondent company. There is nothing to show what has been achieved for those proposed charges. The administrators accept their charges must be approved by the company or the Court. I very much doubt that most of the costs of the 13 June 2013 meeting would be approved as necessary and appropriate and I have doubts as to some of the costs of this litigation.'

and David Whyte was appointed.

What an unmitigated disaster this thing is.
 
Well you gotta hand it to FTI. Its not often you see an administrator get smashed twice in the supreme court for the same gig, first Chief Justice de Jersey in the MPF case and now Justice Dalton in this case. Well done.

Carlosdanger, thanks for the cliffnotes version.
 
10% commission eh? ... that guy has some serious balls to get in the press and try to make out as if he's a victim. Clearly didn't do any homework whatsoever given his lack of understanding on what LM actually invests in. Lending to property development has never been considered low risk.

the amazingly dumb thing about the MPF is that it lent to second mortgages (over 80% of the book). if anyone here wanted to get a second mortgage on a construction deal you'd be charged 12%-18%+ by a proper financier. LM was actually averaging 17%+ across the portfolio, yet MPF only ever paid investors under 10%. Obviously the financial advisers involved didn't care about who was pocketing the difference as long as the commission cheques kept coming.
 
bigheadache said:
10% commission eh? ... that guy has some serious balls to get in the press and try to make out as if he's a victim. Clearly didn't do any homework whatsoever given his lack of understanding on what LM actually invests in. Lending to property development has never been considered low risk.
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If this group that is gathering, putting in the commission money to get our money back, really wants to prove that they're serious about getting all our money back, would publish a nice spec sheet showing exactly how much this all is. As I understand it, it's outstanding commissions, not those already paid out, that have been signed away to the lawyers... Soooo.... How much money is this anyway, compared to the commissions they already raked in?

That article makes it sound like he put all the money he ever made. I would rather doubt that. But if they did, just publish a sheet that says so.

- - - Updated - - -

bigheadache said:
10% commission
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Are you freaking kidding me TEN BLOODY PERCENT UPFRONT!!!!!!
 
am262327 said:
If this group that is gathering, putting in the commission money to get our money back, really wants to prove that they're serious about getting all our money back, would publish a nice spec sheet showing exactly how much this all is. As I understand it, it's outstanding commissions, not those already paid out, that have been signed away to the lawyers... Soooo.... How much money is this anyway, compared to the commissions they already raked in?

That article makes it sound like he put all the money he ever made. I would rather doubt that. But if they did, just publish a sheet that says so.

- - - Updated - - -



Are you freaking kidding me TEN BLOODY PERCENT UPFRONT!!!!!!
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That's what the "IFA" said when interviewed see http://www.dailyrecord.co.uk/news/scottish-news/expat-property-investor-insists-hes-2151284

As in my post above.
 
FTI cop a bit of a roasting in the paper.

http://www.theage.com.au/business/insolvency-duo-raking-it-in-20130814-2rwto.html

it's a real shame that in this whole saga, no one has tried to sell the fund to another "good" mortgage fund manager who could have done a better job. this would give investors another option over winding up the fund in a fire sale (Not necessarily saying its a better option but it would have been an alternative to put on the table). I advocated this back in March when FTI got appointed

i know ASICK has been on his personal crusade about Trilogy (which is fair enough and I never advocated them), Wellington haven't exactly done a stunning job with MFS, but there are mortgage fund managers who didn't "F up" during the GFC. Sandhurst and La Trobe financial run mortgage funds that never froze. If you read the financial press, La Trobe has been buying other mortgage funds and made a play for Banksia assets. Investors in the Perpetual Mortgage trusts didn't lose any money. they've already got 90% of their cash back from the frozen fund. What have LM investors got back? For FMIF nothing. For MPF, a kick in the teeth from the likes of the ACI by the look of it. There's no guarantee that anyone who has any skill would have said yes. Maybe LM is such a dog that no self-respecting fund manager would approach it. But at least open a data room, invite them in and ask the question. FTI have charged $3.2m for their time so far, and they've done nothing for that money apart from spending time arguing with Trilogy and Piper Alderman.
 
bigheadache said:
But at least open a data room, invite them in and ask the question. FTI have charged $3.2m for their time so far, and they've done nothing for that money apart from spending time arguing with Trilogy and Piper Alderman.
Click to expand...

Interesting point, but it seems to me the wider the door gets opened the more of a dog it seems. I do miss ASICK.
 
Information for LM WFMIF investors

Trilogy has just placed some information on its Website regarding the recent court decision and how it may effect investors in the Wholesale FMIF, where Trilogy is still the RE

The update information is dated 15 Aug 2013

As an Investor in the WFMIF I am comfortable that the WFMIF will be wound up by BDO .

DB, through its Receivers (as a secured creditor) will get their monies back first. With the wind up of the FMIF the Feeder Funds investments in the FMIF will also in effect be wound up. We all know that this is going to take some time, FTI had estimated approx 3 years.

As an investor who opposed its Platform BT/Asgard, making the decision to replace LM with Trilogy months ago I am now in the position that I will be receiving even less than a Direct Investor in the WFMIF, as both BDO and Trilogy will in effect take a Fee for their work, and I am certainly not happy about Trilogy still being in the process.

If others invested in the WFMIF are concerned about this likely outcome you should voice your concerns with both Trilogy and your Platform provider. I doubt that any investor will get back very much from their already greatly reduced investment value (officially at $0.59) - despite other figures often being mentioned

Looking at what happened to Equititrust, with BDO as receivers, the Unit Price went from a written down $0.44 down further to $0.13 @ July 2013 while the fees charged by BDO were $1.53Mil plus GST, for 17 months

I am advised that BDO will have its own dedicated website as the information resource for Investors in the WFMIF, and they will post regular Investor updates on that site
 
Rodent69

Have just read the update put out by Trilogy and am amazed to read that Trilogy considers the FMIF to be a SOLVENT fund. They must be living in cloud cuckoo land. According to my trusted dictionary, SOLVENT in accounting terms, means able to pay all debts and liabilities!

It is quite obvious that the only way FMIF can pay all its debts and liabilities is by selling its assets and this does not constitute a solvent fund. From where I stand in the WFMIF, the FMIF still owes me declared unpaid interest distributions from May 2010 to December 2010, not to mention giving me back all my capital. So if the fund is so solvent, I should be getting these fairly soon, shouldn't I???

I agree with you Rodent69. I am not at all happy about having to pay additional fees to Trilogy over and above what investors in the FMIF will pay. All thanks to various platforms under the control of BT who, in their wisdom back in November 2012, voted on our behalf, without consulting us the investors, to change our RE to Trilogy. We now have them to thank for the additional fees we are paying for no extra service whatsoever. BT reckon it was done 'in the interest of all investors' in the WFMIF. How do they work that out? I have not gained one advantage except to pay additional fees which is a distinct DISADVANTAGE.

So BT, how about doing the right thing and either removing Trilogy's control or volunteering to pay the extra fees we have incurred through your stupidity.

Would be good if other WFMIF members voiced their opinions on this forum, regarding the extra fees under Trilogy.
 
Sounds more like tricky wordsmithing by Trilogy to me. I think the Fund is technical solvent. They probably argue that it is within the powers of the constitution to freeze distributions/redemptions so I don't think you could use those to argue they are insolvent. Solvency is a powerful term in legal language. It is illegal to trade while insolvent so if you are calling someone out as insolvent, you're basically saying they are breaking the law.

I think what you mean is that the fund is illiquid under the corps act rather than insolvent. the issue with the fund is liquidity, rather than solvency. if they were liquid, they could start processing payments.

Back on topic, I'm not sure how much blame you could attribute to BDO. At the end of the day, if you have a liquidator or receivers auction, let's face it - everyone lowballs. It makes life hard for liquidators to get good recoveries unless they are quality assets with competitive bidders. And bear in mind, the Fund is likely to be either full of rubbish assets in the first place or alternatively, there are some real "pie in the sky" valuations attached - arguably if they were any good the Fund wouldn't be in this position.
 
bigheadache said:
I think what you mean is that the fund is illiquid under the corps act rather than insolvent. the issue with the fund is liquidity, rather than solvency. if they were liquid, they could start processing payments.
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Well I would say they are insolvent and illiquid. According to Trilogy's own words in various emails, these interest distributions which were declared and unpaid back in 2010 and 2011 tax years are liabilities to the fund. Their words not mine originally. We were even taxed on them in those years although the payments have never been received. Trading while insolvent? - who knows. What does trading amount to? - the fund was frozen since March 2009 with no money in and no money out. What does trading mean for a fund?

Anyway, it is definitely a fund in need of receivership, so I am happy with the court verdict. Frozen for 4.5 years and no income to investors for over three years. Judging by the amount of capital that people have requested to cash out since 2008, a large number of investors want out. Most are retirees who need the money. They have done without income from it for long enough and have no interest in going for years more with no income. I, for one, feel that way. Not that I am happy about the fees we may pay in the process, especially the Trilogy addition.
 
Mysteryman said:
Well I would say they are insolvent and illiquid. According to Trilogy's own words in various emails, these interest distributions which were declared and unpaid back in 2010 and 2011 tax years are liabilities to the fund. Their words not mine originally. We were even taxed on them in those years although the payments have never been received. Trading while insolvent? - who knows. What does trading amount to? - the fund was frozen since March 2009 with no money in and no money out. What does trading mean for a fund?
Click to expand...

Trading for a fund would mean, still charging mgt fees, still incurring expenses like getting valuations, paying audit fees, publishing monthly updates, etc, etc. i'm not here to say they are solvent or insolvent. the liquidators make that accusation.

I suspect that they aren't insolvent, just illiquid. Why? The only debts the Fund has are the loan to Deutsche. Deutsche didn't call in the receivers until much later. I don't count the distributions as debts because most trust constitutions allow REs to freeze redemptions and change distributions. And besides that, "distributions" are really the equivalent of a distribution of "profits" to the owners (ie the unitholders). If you look at the unit price (when things are normal), they accrue income during the month and only when you get paid does the unit price drops back to $1. Therefore "technically" you haven't lost any value by not receiving your distribution. (If you don't believe me, download the daily unit price history). of course, in this case its kind of moot because they have remarked the unit price down and the Fund is illiquid to investors.
 
Dear bigheadache, and Mysteryman

The interchange is interesting and I could easily agree with many comments from both of you in your most recent postings

From my perspective the FMIF was and now still is ILLIQUID- I am sure you will both agree?
So is it - to use Trilogy's word SOLVENT - my view is NO it's not
I believe Trilogy used that word, more than once to make a point, the points being that THEY believed the LM fund was SOLVENT - what total and utter BS- If that were TRUE then I and may other investors who applied for a Redemption as far back as July 08 would have been satisfied and/or distributions would have continued to be paid, neither of these things happened.

They also used SOLVENT to describe them selves as a SOLVENT RE, where they MAY be referring to themselves as "Trilogy" or were they attempting to say we Trilogy as the RE for the WFMIF we are SOLVENT- makes me wonder

Quite frankly all they are going forward is another leach in the process, draining whats left of my money!!

bigheadache- not sure why you write about the Daily UP, as far as the LMFMIF it has NEVER varied EXCEPT when LM did a REVIEW and down graded the UP . To say that "Technically" we haven't LOST any money/distributions is simply not correct, and is not supported by the actual evidence.

Have a read of past postings to see what I mean- In case you are not fully aware some direct investors in the FMIF have actually been receiving Distributions in recent years when OTHER investors in the Feeder Funds ie WFMIF have NOT received these SAME distributions, so the reality is we HAVE actually really lost money, certainly compared to other LM investors

And to finish UP the TWO most recent so called "Capital Distributions" paid via FTI were paid as Capital to FMIF investors BUT investors in the WFMIF received these as catch up INCOME distributions after additional Fees were deducted by TRILOGY as the RE- some much for fairness and equity
 
RODENT69 said:
bigheadache- not sure why you write about the Daily UP, as far as the LMFMIF it has NEVER varied EXCEPT when LM did a REVIEW and down graded the UP . To say that "Technically" we haven't LOST any money/distributions is simply not correct, and is not supported by the actual evidence.

Have a read of past postings to see what I mean- In case you are not fully aware some direct investors in the FMIF have actually been receiving Distributions in recent years when OTHER investors in the Feeder Funds ie WFMIF have NOT received these SAME distributions, so the reality is we HAVE actually really lost money, certainly compared to other LM investors

And to finish UP the TWO most recent so called "Capital Distributions" paid via FTI were paid as Capital to FMIF investors BUT investors in the WFMIF received these as catch up INCOME distributions after additional Fees were deducted by TRILOGY as the RE- some much for fairness and equity
Click to expand...

You are right. It completely slipped my mind that many investors are in fixed term 12 month retail funds, which have always used a $1 unit price. I only look at wholesale rates and the wholesale fund is the one that starts the month at $1.00 and runs up to about $1.0035 at the end of the month. After your $0.0035 of distribution is paid, it jumps back down to $1. (Of course I'm talking about back before the fund was screwed). Apologies for the confusion.
 

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