Liquidators of Finchley Central Funds Management intend to explore new avenues of investigation in an attempt to return investors' monies.
The liquidator of Finchley Central Funds Management (Finchley) will request extra funding from ASIC to pursue extensive investigations into the conduct of the firm's directors, in a bid to recover investors' monies.
In a letter to investors dated 26 February 2010, Finchley's liquidator, Jennifer Low of Sheridans Chartered Accountants, said the firm's investigations have found the directors of Finchley allowed the company, as the responsible entity, to breach the Corporations Act numerous times.
"Some of these breaches include the failure to maintain professional indemnity insurance, failure to have the minimum number of directors and the failure to lodge audited financial accounts from 2007," the letter said.
"Further investigations are needed but because the litigation has no funds, I am limited in the extent to which I can pursue these investigations. To assist me, I intend to make an application to ASIC's Assetless Administration Fund."
Finchley is the responsible entity of the registered managed investment scheme, Finchely Development Capital Funds (FDCF), which has two active trusts - The Gilead Trust and The Riverside Trust.
The Gilead Trust, and Sunrise Community Living Pty Ltd and its associated companies (Viceroy), raised $25.5 million from more than 600 investors to construct a retirement resort.
Funds lent to Viceroy were to be secured by way of a registered mortgage over the land, with ING Bank advancing around $20 million to fund construction of the project.
However, since late 2008 Viceroy has sought an alternative financier after ING advised the firm it was in default and wished to end its exposure to the project.
Despite Viceroy being in potential buy-out discussions, the estimated value of the project and amount owed to ING would leave a very "minimal return" for the Finchley investors, the letter said.
The Riverside Trust raised $15.9 million from about 340 investors for the funding of a boutique hotel development in Western Australia.
Due to a dispute between two parties linked to the projects the development stalled, with both parties forced into mediation that resulted in an agreement to sell the project.
Sheridans Chartered Accountants was appointed official liquidator of Finchley on 22 September 2009.
The two non-consecutive alphabetic letters encountered most often last week caused more controversy than the underlying policy they represented, Wouter Klijn writes.... read more »
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