Damian Templeton and Philip Hennessy were appointed Joint and Several Receivers and Managers of the companies and schemes outlined opposite ("Letten Schemes") by the Federal Court of Australia ("the Court") on 25 February 2010 following an application by the Australian Securities and Investments Commission.
The Court also appointed Mr Templeton and Mr Hennessy as Receivers and Managers of the Property of the SY21 Retail Scheme (to the extent it relates to the interests of investors) on 4 March 2010, and some additional Letten Schemes and Companies on 30 July 2010.
As detailed in the Circular to Investors dated 11 February 2011 it is expected that the companies associated with the Letten Schemes will ultimately be placed in liquidation. To that end, the Australian Securities & Investments Commission ("ASIC") has filed an application with the Court seeking for selected companies to be placed into liquidation and the matter was listed for hearing on 13 May 2011.
On 13 May the Court Ordered that selected companies be placed into liquidation. A copy of the Court Order and reasons for the judgement are now available.
On 4 November 2011 the Court Ordered that the remaining Letten companies be placed into liquidation. A copy of the Court Order and reasons for judgement are now available. All corporate defendants (but for the 17th defendant, SY21 Retail Pty Ltd) to this matter are now in liquidation.
The Receivers and Managers have released Disclosure Reports outlining the background, current status and proposed realisation plans for each of the schemes to which they have been appointed.
These Disclosure Reports, together with a Disclosure Report Overview and the LGH Companies Report are available to investors through the secure data rooms in this website. Please review the Important Notice to Investors prior to reviewing the Disclosure Reports.
Orders were made on 25 May 2010 and 4 June 2010 granting the Receivers and Managers the power to sell the assets of the Letten Property Schemes and Letten Operating Business Schemes respectively. Under the Order dated 4 June 2010, the sale of the Letten Operating Business Scheme assets must be conditional on further approval of the Court.
We have issued an updated realisation report dated 16 September 2011.
Below is a summary of the status of the sale of each business and property:
The Receivers and Managers have filed an application with the Court seeking approval of their remuneration and disbursements for the period 25 February 2010 to 2 July 2010. On 22 December 2010 the Court Ordered that the Receivers’ are authorised to be paid their remuneration, on an interim basis, up to 85 percent of the remuneration claimed pending direction by a Registrar of the Court.
On 12 September 2011 the Court delivered its judgement and reasons in respect of the Receivers and Managers' application for approval of its fees and disbursements for the period 25 February 2010 to 2 July 2010.
The Court undertook a detailed assessment of the fees sought and has ruled that the Receivers and Managers' claim for remuneration be reduced by 5 percent. This is in addition to the 10 percent reduction already provided by the Receivers and Managers. A copy of the Order and the reasons of the Court are available for inspection by all Investors in the secure data room.
The Receivers expect to shortly file with the Court a further remuneration application for later periods. Investors will be advised when this has occurred.
As previously advised, the Liquidators previously notified all known and potential creditors of The Glen Centre Hawthorn Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (“The Glen”) and Twinview Nominees Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (“Twinview”) of their intention to declare a dividend on 28 July 2011.
During the proof of debt process certain claims were received whereby the Liquidators consider it unclear whether they are proper trust creditors and are uncertain of the ability of the trustees of the relevant schemes to rely on their indemnity against trust assets to meet these claims.
In order to resolve these issues, the Receivers and Managers of the Glen Centre Joint Venture and the Twinview Joint Venture have applied to the Court for directions.
On 4 November 2011 the Court hearing in this matter took place. On 12 December 2011 the Court made Orders resulting in no distribution to the creditors of Twinview and the Glen Centre. A copy of the Court order and reasons for judgement are now available.
Orders were obtained from the Court on 11 November 2010 relating to the mechanism for distribution of surplus proceeds of sale. The Court has ordered that the Receivers and Managers are justified in distributing to Investors on a pooled basis with any surplus proceeds of sale to be paid into a common fund for this purpose. A copy of the judgement by the Court, the reasons for the judgement and a Circular to Investors dated 23 November 2010 are available below.
The Receivers have previously estimated the return to Investors and is explained in detail in a Circular to Investors dated 2 September 2010 and located in the secure Investor data room. We have reviewed the assumptions underlying the estimated return and updated them taking account of information now available. On the basis of this we have updated our estimated distribution to Investors which his explained in detail in our circular to Investors dated 11 February 2011 also located in the secure data room.
As noted above under the Distribution to Proper Trust Creditors section, on 12 December 2011 the Court made Orders which in effect resulted in no distribution to the creditors of Twinview and the Glen Centre. The impact on the investor return and estimated timing of any distribution will be communicated in January 2012.
Investors will recall that in estimating the return to Investors we assumed, amongst other things, no capital gains tax was payable by us on the sale of any scheme asset. Our discussions with the Australian Taxation Office ('ATO') in this regard are ongoing. Should the ATO form the view that capital gains tax is payable this will materially reduce any return to Investors. We are unable to advise, at this time, of the ATO's position.
Investors will be updated once the ATO’s final position is known.
There are a number of steps that need to be completed in order to finalise the receiverships of the Letten Schemes.
One of these steps is a dividend payment to proper trust creditors of The Glen Centre Hawthorn Pty Ltd (Receivers and Managers Appointed) (In Liquidation) and Twinview Nominees Pty Ltd (Receivers and Managers Appointed) (In Liquidation).
As advised in the Distribution to Proper Trust Creditors section above, a complex legal issue relating to trust law was heard by the Court on 4 November 2011. The Court has requested further submissions and otherwise reserved judgement.
This, amongst other conditions, must be resolved prior to any distribution to Investors. Once this matter has been resolved the Receivers will provide a further update to Investors regarding the timing and amount of any distribution from the Common Fund (as approved by the Court in its Orders on 11 November 2010).
For any general comments or queries, please email lettenschemes@kpmg.com.au.