Wellington Capital PIF/Octaviar (MFS) PIF

[gardie]

If Mr Korda was acting in an official capacity as administrator or liquidator he would have a statutory obligation to review the PIF transactions and report to ASIC.

He puts on another hat and then can turn a blind eye to them.

I wonder how much he got paid and if one of the driving forces was to make sure the company survived 6 months so it was not a preferential payment and be clawed back.

 

[Duped]

Article in The Australian today http://www.theaustralian.com.au/bus...ds-mfs-decisions/story-e6frg8zx-1225924282890

Mark Korda defends MFS decisions
Teresa Ooi From: The Australian September 16, 2010 12:00AM

.... "At the end of the day, you had to negotiate a standstill arrangement on the loan repayments with the major five creditors and we did," Mr Korda told the NSW Supreme Court yesterday. ...

Um ... errr ... isn't that what appointing an Administrators achieves.

....When Mr Bell asked Mr Korda why he did not take a more prudent approach when MFS faced the prospect of repaying such hefty loans, Mr Korda replied: "A number of creditors wanted the option of MFS not going into liquidation because they could get a better return from their loans in the long run." ....

Um ... hello ... Mr Korda what about that thing before liquidation ... called Administration isn't it? Oh and the number one is a number. So was that one creditor by any chance Fortress. You know, that same Fortress that gained many tens of millions from the 11th hour securitisation of the YVE guarantee. Or perhaps it was two creditors including our Fund managed by the OCV subsidiary that had the sort of "issues" that you had to draw a "line in the sand" for. Ever heard of conflict of interest?

 

[Duped]

From the limited info I've got thanks to AAP:

The PTQ and Fortress ended up going all the way to the High Court over the securitisation of the YVE guarantee. Hmmm ..... maybe that suggests that Freehills and/or Korda's assessment that there was a "reasonable prospect of reaching an accommodation with creditors" ... ummm .... like ... ummm .... fell well short of reality.

And given that we even had a Supreme Court Judge, rightly or wrongly, rule that Fortress' security was invalid, suggests that the prospective process was not as certain as Freehills and/or Korda imagined them to be.

It seems to lay me from this info, that Freehills and/or Korda greatly underestimated the impact that the hidden transactions and the scale of the collapse of OCV would have on the "reasonable prospect of reaching an accomodation with creditors"

And I say that the Fortress securitization of the YVE guarantee was hidden because the OCV Interim Financial Report of 28 April 2008 stated that on "29 February 2008, ..., the Group repaid in full the loan facility to Fortress". That was never true was it given that facility covered the YVE loan from 22 January 2008?

Are the corporate professional types telling us that the PTQ actions in the interests of the note holders aren't "reasonable"? What say thee to that PTQ? Is it that such mischievous behaviour such as the above mentioned Financial Report and the PIF "issues" doesn't cause alarm for such professional types anymore (enough alarm to call in administrators) because it's common place in their world? Are the likes of Freehills and/or Korda facilitating us all in a race to the bottom?

It seems to lay me based on the limited info that, in the future, the likes of Korda/Freehills should perhaps know their place and leave such deliberations to the DOCA phase.

Or maybe the Sydney and Melbourne corporate professionals should get out and learn about the rest of Australia rather than just trying to mould us into their image from their grand Capitals.

 

[selciper]

The Age writes: THE insolvency specialist Mark Korda told a public examination of the collapse of MFS yesterday that the decision to appoint Jenny Hutson's Wellington Capital as the manager of the Premium Income Fund was the ''lesser of all the evils we could have done''.

Im sure that those curious words weren't welcomed in a certain bunker. Makes me want to bang on about the need for an EGM.

 

[gardie]

Selciper

You need to have a plan and reason for calling the EGM including resolutions.

The lady in the red coat will merely stonewall you at a meeting just to ask questions. Everything will be hidden behind commercial confidentiality.

As someone else said get a EGM to get rid of the replacement fee and get the action group to go out and actively pursue an RE prepared to be transparent and act without conflict and work with your lawyers on the class action.

There are good quality managers out there who are work out specialists.

 

[selciper]

gardie -

I’m in no way suggesting that an EGM be called without thorough planning and tactical design. Obviously, it would take some time to organise. WC would obfuscate at such an event - of that there is no doubt. But it is essential that a fresh means for PIF investors to voice their deep concerns be developed.

I’m not so sure that recent press reporting is proving to be favourable to WC’s image. A good debater or chess player seizes the opportunuty when he sees a growing weakness in his opponent.

 

[Cookie1]

From the "Trading Room" Fairfax Digital

http://www.tradingroom.com.au/apps/...ished/2010/9/259/catf_100916_184000_3445.html

Documents showed MFS was in cash deficit

SYDNEY, Sept 16 AAP
September 16 2010, 6:40PM

Financial documents prepared by corporate advisers to the failed Octaviar Ltd showed the company may have been in a net deficit during February 2008, a court has heard.

The liquidator's examination into the Gold Coast-based property group, which collapsed in September 2008 owing about $2 billion to creditors, heard that cash-flow documents indicated the company did not have enough assets to pay its creditors.

The documents were prepared by corporate recovery specialists KordaMentha, which advised the board that MFS remained solvent.
KordaMentha co-founder Mark Korda told the NSW Supreme Court on Thursday that the cash flow waterfall documents, of which several versions were prepared based on the information available, were never intended to be used to assess the solvency of the group.

"That's not the purpose of this report," Mr Korda told the court.

"It was to give a snapshot of the group as it was being turned into cash."

Mr Korda was examined by barrister Dominic O'Sullivan, SC, representing the liquidators of Octaviar Investment Notes and Octaviar Investment Bonds.

Octaviar was the Gold Coast-based property group previously known as MFS that collapsed in 2008 owing about $2 billion to creditors.

In the afternoon session, Mr Korda expanded on his answer regarding the use of cash flow waterfall documents as an indicator of solvency.

"You could use the cash flow waterfall as one piece of information when determining if the company is solvent or not solvent," Mr Korda said.

Mr Korda reiterated that the purpose of the cash flow waterfall was not to determine solvency.

The court also heard the different versions of the cashflow waterfall document had valuations for MFS' remaining 35 per cent stake in the Stella business ranging from zero to $780 million.

MFS sold 65 per cent of the Stella travel business for about $400 million in February 2008 to private equity firm CVC Asia Pacific.

Mr Korda said he became aware after the transaction settled that CVC had complained about the state of the Stella accounts.

The examination before senior deputy registrar Andrew Musgrave continues.

By Jordan Chong

 

[Duped]

[FONT=&quot]http://www.theaustralian.com.au/business/mfs-creditor-challenger-was-ready-to-defer-loan/story-e6frg8zx-1225925056946[/FONT]
[FONT=&quot]MFS creditor Challenger was ready to defer loan [/FONT]

• [FONT=&quot]Teresa Ooi [/FONT]
• [FONT=&quot]From: [/FONT][FONT=&quot]The Australian[/FONT]
• [FONT=&quot]September 17, 2010 12:00AM[/FONT]

[FONT=&quot]"... But not all creditors were prepared to delay loan repayments, the NSW Supreme Court heard. According to counsel Dominic O'Sullivan, representing the liquidators of Octaviar Investment Bonds and Octaviar Investment Notes, the Public Trustee of Queensland had no intention to enter a standstill arrangement with MFS and had recommended that MFS be wound up as insolvent.
"Was that a shock to you," Mr O'Sullivan asked Mr Korda, who replied: "No, it was not a shock because the Public Trustee had no economic interest in the notes. ..."[/FONT]

[FONT=&quot]WOW!!!! Is Korda saying that the PTQ doesn't have a duty and/or responsibility to get the best possible commercial outcome for the noteholders? Or is Korda accusing the PTQ of not performing its duty/responsibility to act in the best commercial interests of the noteholders?

From what the PTQ has previously reportedly said, it sounds like the latter - whereby Korda is having a shot at PTQ's standard of care not being tied to its own financial gain. E.g. the acting Public Trustee of Queensland, Patrick Wedge, said in a statement: "As trustee for the note-holders, this office is acting consistent with our duties under the trust deed. This office will take all necessary steps to protect the interests of the note-holders." BrisbaneTimes.com.au 28 May 2008 Scott Rochfort.
[/FONT]
[FONT=&quot]Don't forget that Korda was effectively already liquidating assets by selling 65% of Stella. Add this to [/FONT][FONT=&quot]the 11th hour securitization in favour of Fortress and the apparent attempt by OCV to conceal this transaction in the ASX announcement of 28 April 2008, it's not surprising that trust was lost and that the PTQ believed the interests of its noteholders would be better served by court appointed administration.
[/FONT]
[FONT=&quot]It seemes that it wasn't much of a shock to Korda either. So why then did he find that there were "reasonable prospects"?[/FONT]

 

[Jadel]

It seemes that it wasn't much of a shock to Korda either. So why then did he find that there were "reasonable prospects"?

Mr Korda, is a philanthropist Duped

 

[Duped]

Hmmm ... perhaps MFS/Octaviar was better suited for a 90s experience than Mark Korda anticipated. After all there was scoundrel type behaviour, the creditors weren't banks and King failed to get his windfall capital raise.

Sounds to lay ignorant me that Mr Korda had a fixed mindset and wasn't as flexible in his approach for handling MFS/Octaviar as he needed to be.

From his BusinessSpectator interview of 9 October 2009

AK=Alan Kohler
SB=Stephen Bartholomeusz

"MK: A lot of people ask me what’s the difference from the last crash and I think we’ve had a couple where it’s the early ‘90s and then there were some of the icons in the 2001, but overseas is completely different from the early ‘90s.

For a start, remember that in the early 90s, interest rates were 22 per cent. Property yields at best seven or eight. So you’re always going to have a cash flow problem. Interest rates went up yesterday, but it's completely different. I think you’ve seen the economy is not as bad. There are a number of reasons for that, but obviously the stimulus package has helped that, but the unemployment and consumer confidence is a lot better. In the 90s, we deregulated the financial markets in the mid-80s, so there were lots of people lending in lots of different ways and the State Bank of Victoria ended up in Commonwealth Bank and there was Tricom and all those. There are some non-bank financial institutions around that, there have been collapses, but not like the ‘90s. I think interest rates are probably the fundamental difference and this recession the world is having is actually because the global financial system collapsed. This is staggering, but it has been propped up by the governments.

AK: Staggering that it wasn’t worse than it was?

MK: The 1990 situation was about good, old-fashioned economics and things were not working, people were being fired and all this. This thing is about the global banking system collapsing. You’ve got the investment banks that were geared at 35, 40, 50 to one and all of a sudden everything just sort of stopped. So, I think it’s very different this time around.

AK: Yet a year ago you must have been gearing up for a big increase in business. Obviously you’re not looking forward to the misfortunes of others, but certainly getting ready for a big increase. But it seems to have completely changed and is now different from what you might have expected. Is that the case? [emphasis added]

MK: A very good example is that we have a large real estate and consulting practice. In the last quarter of December 2007, it was probably the slowest, quietest time we’ve had. By the first quarter of 2008, the tipping point was probably Centro in Australia. That went and got into difficulty in December and then by January we were working on MFS and Allco and a few others, all within a week. It’s been busy since then, but we were always careful not to put too many people on – steady as you go. We do a lot of property work. We have about 25 real estate professionals that work for us and that’s keeping us very busy at the moment. [emphasis added]

SB: Is the nature of the work different? Less of the formal insolvency type work and far more of a consulting behind the scenes and advisory-type work?

MK: Yeah. Or when developers or builders have been into trouble we’ve gone in and finished the buildings. We’re just standing in and finishing things off, rather than closing down the site and auctioning them off, so it’s probably a difference from last time as well.

SB: One of the key differences is the banks. They’re in better shape this time round and they’ve behaved differently. Is there an explanation for why they haven’t just gone in and put people like you in charge of some of these companies?

MK: Well, the hardest thing is when you run out of cash, like Timbercorp. Interest rates have come down so much that the cash flow drain is not as much as it was last time. With 22 per cent interest rates, you can’t pay any of your interest. At, say, 4 per cent plus the margins, you’re in the game, so the interest rates falling has probably been the key determinate.

AK: And this time around there seems to be a lot less 'lock-changing;, where you just go in and shut the place down or change the locks. It’s more a voluntary administration and more cooperative situations. [emphasis added]

MK: The banks have got very skilled people. Many of the bankers I deal with have been doing this since 1992 – been there, done that, know the consequences. Again, the banks have also had very good credit risk rating systems that have been brought in since the 90s, so they know their clients better and they had a handle on them, with a depth of experience. There will always be the scoundrels out there and you have to deal with them, but generally I think that experience has been good. [emphasis added] [Poster's note: How does one deal with them? Draw a line in the sand behind "issues"?]

AK: There’s obviously a chance now that interest rates are going to keep going up, four per cent next year, possibly five per cent. Is there a layer of companies that you think will actually tip over if there’s two per cent on interest rates?

MK: Yeah. I think there’s been quite a bit of debt rescheduling in highly-leveraged companies that I think may need to be sorted out, probably in the second half of 2010, 2011 and there’ll always be companies that just get into trouble and run out of cash like a Timbercorp. But we can’t see interest rates in the ten or fifteen per cent-range at the moment, can we?

SB: The equity markets seem to have become the lender of last resorts to companies that are experiencing pressure.

MK: Yeah. There would be quite a few companies that we would say are in distress that have had rescue capital applied now, at obviously very deep discounts to the existing shareholders and it’s caused a lot of angst. But for many banks and for many people around the world, they would be very happy with the rescue capital that’s come through.

AK: Well, in fact, in previous times, that capital probably wouldn’t have arrived at all, at any discount.

MK: So, that’s another significant change to say the ‘90s or the recession in the early 2000s. It’s just staggering how much money became available and so quickly. [emphasis added] [poster's note: not in MFS' case]

SB: Is there a sense that the banks and their advisors, people like you and perhaps maybe the shareholders, the institutions as well, have looked at last time round and said well let’s not start the dominos flowing this time, let’s make sure that we don’t start that vicious spiral?

MK: The cash flow’s held up, you can sort of service your debt, so that’s good. You can service your debt and lower-priced rescue capital around. I don’t think there are any new ways of going broke. Although the one significant thing this time around is complexity. It is staggering the complexity of say an Allco or a Babcock & Brown or a Timbercorp. But I think the world will demand, and get, much less complexity. [emphasis added]

AK: They were much more complex, were they, than I don’t know say Qintex or Adelaide Steamship, Bond Corporation?

MK: I think they were complex, but not even Bond Corporation had 750 companies.

SB: A brewery is a bit different from some of the securitised assets that were inside those groups.

MK: Yeah, you actually owned an asset and you could go and see the beer being brewed rather than sort of I’ve got a share in this company that’s got a share in this company that has a share in this company that has a share in this company. That complexity I think will be unwound, but then no doubt it might come back again."

 

[selciper]

I notice that no investor update has been posted on the PIF website since 02.07.10.

 

[Cookie1]

Court grilling reveals MFS' overdue tax
By ROB STOCK and businessday.com.au - Sunday Star Times
Last updated 05:00 19/09/2010

Even as the New Zealand investors in OPI Pacific Finance – owed $302 million last August – were being assured in January 2008 that the finance company's Australian parent was on a strong financial footing, the Aussie firm was already two months late in paying a $A50m tax bill, and had called in a corporate insolvency specialist for advice.

The revelations came in court grillings in Australia this past week, in which liquidator Bentleys questioned insolvency specialist Mark Korda, of Korda Mentha, on exactly when Octaviar, which changed its name from MFS prior to being put into liquidation, actually became insolvent.

At the time the tax debt was two months overdue, the directors of MFS Pacific Finance, as OPI Pacific was then known, had just issued a prospectus extension assuring investors here that their money was safe, and that MFS had undertaken to provide emergency liquidity should there be a run on funds.

The directors also spoke of MFS Pacific's "prudent lending and investing practices", claiming it had net assets of $20.8m. Three months later it revealed a shortfall of some $334.8m in assets needed to pay back all its creditors – including mum and dad debenture holders – making it one of the worst finance company collapses behind the likes of Bridgecorp, Hanover, South Canterbury and Strategic Finance.

Full story: http://www.stuff.co.nz/business/industries/4143681/Court-grilling-reveals-MFS-overdue-tax

 

[simgrund]

I notice that no investor update has been posted on the PIF website since 02.07.10.

Selciper, could NSX Release of 15 September 10 fill the gap?
And perhaps it could just stop my confidence slide for now, having been in free fall these past 2 years.
Regards,

 

[selciper]

simgrund -

WC are probably under no obligation to put up the recent avalanche of announcements on their PIF website. In my book, such information should be circulated fast and as widely as possible. The recent PDFs will probably amble in on the ageing site in a day or two.

 

[simgrund]

simgrund -

WC are probably under no obligation to put up the recent avalanche of announcements on their PIF website. In my book, such information should be circulated fast and as widely as possible. The recent PDFs will probably amble in on the ageing site in a day or two.

Agreed; "should be circulated".

Without offending anyone, I would pluck that particular PDF out from impending obscurity and keep it afloat as the first example of POSITIVITY in our PIF saga; however miniscule.
And within the first 3 years of promised "revival".
Our brethren in City Pacific are mentioned in today's SMH Business. Sobering reading.
Regards,

 

[seamisty]

I couldn't help but notice Wellington Capital Ltd led by founder and managing director Jenny Hutson fails to mention her role of Responsible Entity for the Premium Income Fund in her list of achievements in the latest G8 presentation posted on the ASX yesterday? Is Jenny Hutson ashamed of her association with our fund because of the inability of Wellington Capital and cohorts to deliver and our fund appears to be spiralling backwards under WC management? 'Moving forward' with G8 will not alter the fact that there are over 10,000 investors in the PIF who would have to be feeling extremely concerned at WC's ability (more like inability?) to turn the PIF around, recommence distributions and restore unit value in 3-5 years. Waiting, waiting Jenny. Or maybe you are busy elsewhere? I hope potential and existing G8 investors do their research into the pathetic performance we have been subjected to for over two years since the current G8 chairperson has been at the helm. Seamisty
(Also no mention of her prior involvement with MFS!)


'Jenny Hutson, Chairperson
B.Com, LLB, FAIMM, MAICD
Jenny is an investment banker and
fund manager. She is an experienced
corporate adviser and company director.
Jenny has a keen interest in the welfare
and education of children. In addition to
chairing G8 Education, Jenny is a director
of the Royal Childrens Hospital Foundation in Brisbane.
Jenny was previously a partner of a major law firm. She has over
20 years experience in board issues involving listed companies
including as chair of S8 Limited. Jenny was previously named
Queensland Businesswoman of the Year and Australian Institute of
Management Owner/Manager of the Year'::

 

[Duped]

http://archive.sclqld.org.au/qjudgment/2010/QSC10-347.pdf

Greig & Anor v Octaviar Limited (Receivers and Managers
Appointed) (In liquidation) & Anor [2010] QSC 347

Basically the court's ordered that Deloitte (i.e. Greig & Harwood) get some more money out of Octaviar for work done up to when AND AFTER McMurdo gave them the flick. More $ in the bag for Deloitte. This time it's $123,797 + $94,892 + $238,024 +$112,876 + $48,212 = $617,801 and then some

(Oh and it appears to me that Deloitte don't even have to wait for Bentley to hand over some of that cash. Deloitte can now just keep $ they still hadn't passed to Bentley's control.)

Let's all not forget that Octaviar under Chris Scott shoved Deloitte in as Voluntary Administrators just before PTQ could get their own administrators through the door.

That's worked out well for us fellow creditors, the PIF investors, hasn't it? NOT. Thanks for that move Chris Scott.

How many more people are going to underestimate the PTQ's determination not to roll over? PTQ have made their position very clear.

More money that us PIF investors lose to corporate professionals digging their heals to avoid being dragged out into the Public Trustee's QLD sunlight.

Yet we still have false prophets promising us that we're better off fighting. Well at some point you've just got to avoid the shallows and tack rather than run aground.

But then again, if you're making money from the battles, you've kinda got a big disincentive to encourage the parties to shake hands and hand the process back to them. Much like Korda was disincentivised to hand his charge over to the Adminsitrators in the first place; as senior counsel noted last week. A financial market sticky with moral hazards.

What did Michael King call JP Morgan? Pretenders?

How much longer will they send more of our $ to climb over the top to pointless deaths just to move the remote and battle-philic Field Marshal's drinks cabinet 5 inches closer to Berlin.

Know yourself and know your opponent. I can't find any quotes along those lines on the WC website. Maybe Hutson should read some Sun Tzu. Probably essential reading for all those aspiring leaders who's careers were born on the battle ground of law.

 

[charles36]

DUPED, why are you complaining, Chris Scott was advised no doubt by our illustrious leader, two hats, probably, ours didn't fit. By the way, the 1 cent so called CASH PAYMENT is a return of our own money, it is not from profit and my opinion, for whatever that is worth, it should not be counted towards the promised 3 cents which will then attract a penalty of fees forever. Cash payment is not a distribution and I hope this assertion is supported by the unit holders. Keep up the good work Duped. Regards to all, Charles36.

 

[Duped]

Thanks Charles. It's a given so I left JH out of the text. Trying to reduce length of my posts. Please read JH along with all the other corporate professional rent seekers.

 

[seamisty]

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