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.
Mr Templeton and Mr Hennessy were then appointed as liquidators by the Court of the companies on 13 May 2011 and 4 November 2011.
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. The Schemes’ interests in each asset have since been sold with the only remaining interests being:
- Mount Hutt project
- Moorhouse Shopping Centre project.
The realisation of these remaining interests are expected to be completed over the coming months. The realisation of the interest in the Mt Hutt property will require approval of the Court. Investors will be advised when this is scheduled to be heard.
This project related to a property in the South Island of New Zealand upon which townhouses were to be developed. The registered proprietor of the Mount Hutt property is Tosswill Limited (a New Zealand company). Tosswill Limited is owned by Mark Letten (on behalf of Investors) and a third party. A liquidator has not been appointed to Tosswill Limited.
The Receivers have reached an agreement with the third party shareholder to settle the disputes and realise the Investors’ interest in the Mount Hutt property owned by Tosswill Limited for the benefit of the Investors in the Common Fund.
The Receivers believe the consideration of NZ$220,000 to be received under the Settlement Deed from the third party shareholder represents the best price reasonably obtainable for the Investors’ interest having regard to the circumstances. The Settlement Deed is subject to the approval of the Court before the transaction can be settled. A copy of the Court Order dated 4 December 2014 is attached below, Investors are advised that the Court’s reasons for the judgement are available upon request.
As a result of our investigations into the affairs of the Letten Schemes and previous findings by the Court, the Receivers are in the process of commencing proceedings against Mr Mark Letten and Mr Paul Lane for their involvement in the operation of the schemes.
On 28 March 2014 the Receivers and Managers filed an interlocutory application for directions on the question of whether it is justifiable to use funds from the Common Fund to fund these recovery proceedings. On 26 June 2014 the Court granted the orders sought. A copy of the judgement by the Court and the reasons for the judgement are available upon request.
On 10 July 2014 Mr Letten applied for leave to appeal the decision of the Court. The leave application will be heard on 6 August 2014.
Mr Letten’s plea hearing for criminal charges brought against him by ASIC occurred at the County Court of Victoria at different times during May 2014. Mr Letten had pleaded guilty to 27 criminal charges. On 14 August 2014, Mr Letten was sentenced to 5 years and 8 months imprisonment in relation to the charges. For more information, please refer to the ASIC website.
From time to time, the Receivers make applications to the Court for approval of their fees and disbursements.
On 17 June 2013, the Receivers filed an application in respect of their remuneration, costs and expenses incurred in the performance of their duties for the period 1 January 2012 to 31 March 2013 ("Remuneration Application").
On 17 March 2014, Registrar Luxton of the Court held that the Receivers’ Remuneration Application be discounted by $545,075 ("Remuneration Decision").
On 28 March 2014, the Receivers filed an application for review of the Remuneration Decision ("Remuneration Review Application"). The decision to file the Remuneration Review Application was not taken lightly.
The Court has listed the Remuneration Review Application for hearing at 9.30am on 11 August 2014. The Court has also made orders for ASIC to brief an independent assisting counsel to assist the Court in respect of the Remuneration Review Application.
Investors are advised that the Receivers will not seek reimbursement from the Common Fund for any fees or costs associated with the Remuneration Review Application.
Investors will be advised of the outcome of the hearing as soon as it is possible to do so.
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 upon request.
On 19 November 2012 the Court ordered that the Receivers and Managers are justified in their approach to determining Investors’ entitlements to receive a distribution from the Common Fund.
The effect of the judgement is that:
- investors are entitled to include amounts actually paid to the Scheme, excluding any capital gains or other entitlements reported but unpaid, when determining the manner in which Investors' claims against the Common Fund should be calculated
- investors are entitled to include any amounts defined as non-Scheme specific investments (such as the 'War Chest' or 'Project Deposit Bonds') in their claims on the Common Fund
- payments historically received by Investors are to be taken into account in calculating Investors' entitlements to receive a distribution the Common Fund.
A copy of the judgement by the Court, the reasons for the judgement and a Circular to Investors dated 19 November 2012 are available upon request.
We engaged with the Australian Taxation Office ("ATO") regarding the obligation of the Receivers and Managers to account for any capital gains tax on assets sold by them (as agents for the relevant company) during the receivership and the position of Investors.
The ATO provided a private binding ruling ("PBR"), the effect of which was that the Receivers did not have to pay tax on the realisation of the properties of the Schemes.
In addition, the ATO issued a factsheet which outlined the options available to Investors should this wish to consider amending previous taxation returns. Investors should contact the ATO should they have any further queries.
The Receivers and Managers previously called for all Investors to submit Formal Proof of Claim Forms ("Claim Form"). Based on the claims received at that time, an interim distribution was paid to Investors on 28 May 2013 at the rate of 27.1009 cents in the dollar based on the methodology ordered by the Court.
A second interim distribution will shortly be paid to Investors. Investors whose claims had not previously been admitted are required to submit their claims by 31 July 2014. Investors will be advised when this is paid.
A final distribution is expected to be paid once all matters are finalised in the receivership and liquidation.
It is not possible to reliably estimate the final distribution that will be paid to Investors as it will depend on the outcome of the final asset realisations and litigation. We will advise Investors prior to the final distribution being paid.
For those Investors who have not yet submitted a Claim Form [PDF 69KB]. They might be excluded from a future distribution if a Claim Form is not completed and returned to us as soon as possible.
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