ASIC wants LM Fund wound up

Last updated 17:27 18/07/2013

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Australia's market regulator is pushing for liquidation of a frozen property fund holding millions of dollars of New Zealanders' money.

In a Queensland Supreme Court hearing this week, the Australian Securities & Investments Commission made submissions seeking to wind up the LM First Mortgage Income Fund, run by ex-pat Kiwi Peter Drake. 

ASIC said it wanted registered liquidators from PricewaterhouseCoopers appointed as the receivers to wind up the fund rather than see continued fighting for control among rival fund managers and big creditor Deutsche Bank.

"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," ASIC commissioner Greg Tanzer said.

"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."

When the fund was frozen in late 2009 it had about $175 million of New Zealand investors' money invested in it.

The current court battle was started by two investors of the FMIF seeking orders for the appointment of Trilogy Funds Management as responsible entity for the fund. The incumbent, LM Investment Management, opposed the application.

Deutsche Bank has already appointed KordaMentha as receiver, but ASIC said it wanted PWC to work alongside to achieve an orderly realisation of assets.

Justice Jean Dalton reserved her decision in the matter.

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