Multi-million dollar fund wind up

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ASIC has sought orders that multi-million LM First Mortgage Income Fund (FMIF) be wound up, and that independent liquidators be appointed as receivers.

“It is ASIC’s view that the protracted litigation surrounding the FMIF is not in the best interests of investors and wishes to see the matter resolved as soon as possible”, said ASIC Commissioner Greg Tanzer.

LM Investment Management collapsed in March this year. It is the responsible entity of seven registered managed investment schemes including FMIF. It also operates the LM Managed Performance Fund (LMMPF).

In proceedings started by two investors of the FMIF, ASIC made a submission that registered liquidators from PricewaterhouseCoopers be appointed as the receivers to wind up the fund.

“ASIC took this action as it believes that the appointment of receivers to the FMIF will allow the winding-up to proceed in the most efficient and cost effective way to provide the best chance of achieving the maximum return for investors,” said Tanzer.

“As such, ASIC believes that the persons responsible for winding-up the FMIF should be appropriately independent.”

Before this week’s proceedings Deutsche Bank, a secured creditor of the FMIF, appointed McGrathNicol as receiver of the FMIF. If appointed, ASIC proposes that the incoming receivers work in conjunction with Deutsche Bank's receiver for an orderly realisation of the assets of FMIF. Justice Dalton reserved her decision in the matter.

  • alleycat on 19/07/2013 4:05:28 PM

    Another Qld mortgage fund bites the dust.
    This fund was lending supposedly on a very conservative LVR, e.g. 67.6% of construction costs or so the said. What they didn't tell you was that a profit projection was also built-in to those LVR's.
    So if the developer/builder thought he'd make 25.0% profit on the sale, that 25.0% was also built into the loans.
    Do you think that increased the risk to investors ?
    At one stage 30.0% of the loan book was on vacant land.
    Do you think that increased the risk to investors ?
    Apparently ASIC didn't see to think so and now the are concerned about the investors.
    It's a bit bleeding late.... somehow !!

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