Millions of dollars in creditors' money is sitting idle in bank accounts nearly two years after the collapse of managed investment scheme spruiker Great Southern because its liquidators can't fund the work needed to release it.
In an annual report to creditors of the failed agribusiness, Ferrier Hodgson warned it was impossible to determine the financial position of most of the 29 entities within the group because of the nature of intercompany loans and the subsequent appointment of receivers to several key subsidiaries.
"At this stage we are unsure as to when the receivers and managers will retire (from the Great Southern entities) or whether there will be any surplus funds available to the unsecured creditors," liquidator Andrew Saker said.
Mr Saker and his team have been working to untangle the group's multi-billion-dollar collapse since May 2009, when it toppled under the weight of more than $700 million in debts. Great Southern raised more than $2.3 billion from 43,000 investors in forestry, cattle and horticultural schemes over its lifetime.
In the few cases where surplus cash was available for unsecured creditors - such as the $4.5 million in proceeds from two completed cattle projects and $750,000 in harvest proceeds from the now-completed 1997 plantations scheme - Ferrier Hodgson was unable to distribute those funds.
This was because liquidators were not authorised to incur any further costs or draw fees from insolvent companies.
In one case, Ferrier Hodgson asked receiver McGrathNicol - which is selling assets in a bid to recoup funds for Great Southern's syndicate of financiers - for funds to allow it to distribute some of the cattle project proceeds to investors. McGrathNicol refused. Mr Saker and his team were now seeking court approval to recover any costs incurred in distributing spare cash in the relevant projects.
However, Mr Saker confirmed Ferrier Hodgson had also secured funds from ASIC's Assetless Administration Fund to pursue further investigations into Great Southern's collapse. The ASIC fund was set up to finance liquidators' investigations into failed companies "where it appears that enforcement action may result" from the findings.
It comes after Hillcrest Litigation Services announced in January that it had agreed to bankroll investigations into "certain aspects" of the group's affairs leading up to its collapse and any subsequent court action. In his report, Mr Saker revealed Hillcrest had advanced $230,000 for the first stage of his investigation.
Any legal action launched as a result of Ferrier Hodgson's findings would add to several existing lawsuits.
Among them is an IMF-funded class action over a restructure of Great Southern's cattle projects in 2009 and a lawsuit against the agribusiness and Bendigo & Adelaide bank over loans to growers.
GTP Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
