Frozen Oz fund investors vote to liquidate

A meeting of investors on the Gold Coast yesterday voted to put the Currency Protected Australian Income Fund into liquidation.

The creditors of an Australian fund management firm - which froze more than $100 million of New Zealanders' money in 2007 - have voted to liquidate the company.

Thirteen hundred Kiwi investors put money into the Currency Protected Australian Income Fund run by Queensland-headquartered LM Investment Management.

This fund acted as a feeder into LM First Mortgage Income Fund, which has a number of commercial Australian property investments but was frozen in the wake of the global financial crisis. At the time of the freeze in March 2009, New Zealand investors had A$95 million of capital ($NZ119 million) in this fund.

Voluntary administrators were called into run LM in March and in April, the administrators - from FTI Consulting - said management had advised the unit price in the First Mortgage Income Fund was about A55c as at December 31, down from A59c as at June 30 last year.

The administrators in their investigation of the company said they have found evidence that the firm may have traded while insolvent.

The administrators also said investigations revealed that some LMIM directors may be guilty of various offences committed prior to the appointment of the administrators.

At a meeting in Surfers Paradise yesterday afternoon, LMIM's creditors voted to liquidate the company:

"The Administrators have advised that at a creditors meeting held today creditors voted that LM Investment Management Limited be placed into liquidation and that the Administrators, Ginette Muller and John Park be appointed the Liquidators to wind up the Company." a spokesman for FTI said last night.

FTI's report sent to creditors last week advised that winding up LMIM was the best option.

"In our view, the winding up of the Company is the best option for creditors. If creditors resolve to wind up the company, Liquidators will be appointed to realise the Company's assets for the benefit of creditors," the administrators said.

"This option also allows voidable transactions, insolvent trading, breaches of director duties and other offences to be investigated more thoroughly. If the Company is wound up, creditors with guarantees from the Company's Director(s) could pursue the Director for those debts immediately."

Last week FTI said the estimated dividend to creditors for winding up the company is unknown.

The book value of the company's assets is $7.934 million.