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:
As previously advised, 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 Receivers and Managers have subsequently filed a Court application seeking approval of their remuneration and disbursements for the period 3 July 2010 to 31 December 2011. On 13 April 2012 the Court Ordered that the Receivers’ be authorised to pay their remuneration, on an interim basis, up to 85 percent of the fees claimed and 100 percent of disbursements, pending final determination by a Registrar of the Court.
Investors will be advised when a final determination is made by the Court.
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 is currently being finalised and will be communicated to Investors as soon as possible.
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 prior to making an interim distribution to investors including:
- obtaining a determination from the ATO regarding whether capital gains tax is payable for each of the Letten Schemes where surplus funds are available. The Receivers' will shortly be applying for a private binding ruling from the ATO ("PBR"). Whilst it is difficult to give a time estimate or predict the outcome of the application, it is estimated to take at least 3 months. We are also discussing with the ATO an appropriate form of advice to be provided to Investors. The content of that advice will be based on the PBR issued to the Receivers. The PBR will, if granted, provide guidance to the Receivers and Investors regarding their tax position.
- conducting a formal proof of claim and distribution process in relation to the Common Fund.
To prepare for the payment of an interim distribution to Investors from the Common Fund and to streamline the process for when a distribution can be paid, all Investors must submit a Formal Investor Claim Form (PDF 40KB), together with all evidence substantiating their claim, and return it to this office on or before Friday 18 May 2012.
Should the Receivers require evidence in addition to that already submitted, Investors will be contacted directly.
The Receivers are unable to provide notification of an intention to declare a distribution until all Claim Forms have been received and reviewed and certainty is obtained regarding the Receivers’ tax obligations. It is the Receivers’ current intention to make an interim distribution once the tax issues are resolved.
The Receivers will advise Investors at the earliest possible time of the estimated timing and amount of the interim distribution. However, it is expected to take between 3-6 months.
For any general comments or queries, please email lettenschemes@kpmg.com.au.