LMIM should be wound up: Administrator
A report sent to the creditors of Australian fund manager LM Investment Management (LMIM) has recommended that it be wound up.
The move is the latest event in the collapse of the LM group of companies, an Australian fund management operation founded by expat Kiwi businessman Peter Drake.
It operated the now frozen First Mortgage Income Fund which was frozen in late 2009 containing some A$140 million ($160 million) of money invested by New Zealand investors.
Since then the unit price of the fund has dropped from A$1 to 59 Australian cents, and investors have been warned to brace for further falls.
The LMIM Report by FTI Consulting, which is the administrator of LMIM, will be presented to a meeting of creditors in Surfers Paradise on Thursday.
In a statement announcing the recommendation for liquidators to be appointed, FTI said in its view, winding up the company was the best option for creditors.
The dividend to creditors for winding up the company is unknown.
"We anticipate a dividend to creditors may be distributed in liquidation, however at this stage we are unable to quantify the amount of such a dividend due to the commercially sensitive nature of the property-related assets of the company and the unknown recoveries," the administrators said.
The book value of the company's assets is A$7.93m.
FTI was appointed by Drake to LMIM as well as to its sister company, LM Administration, which the administrator is also recommending be put into liquidation.
In the report to creditors of LM Administration sent out last week, FTI revealed it was seeking the repayment of more than A$26m of loans made to Drake himself, loans which Drake has admitted exist, but which he says he cannot repay.
The creditors report of LMIM is not being released to the media until after the creditors' meeting.
New Zealand investors in the First Mortgage Income Fund are also awaiting the outcome of legal action to determine who should now wind up the fund and release what remains of their investment.