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http://www.smh.com.au/business/timbercorp-almond-investors-get-zilch-as-banks-take-all-20110616-1g5zz.html

How unjust it is!

Timbercorp almond investors get zilch as banks take all
Ben Butler
June 17, 2011

INVESTORS who pumped $395 million into almond-growing schemes run by failed agribusiness group Timbercorp are to receive nothing from the sale of the orchards, a court has ruled.

While 7000 investors have been left out in the cold, Timbercorp's bankers, ANZ and BOS International, will share in more than $99 million reaped from the 2009 sale of the orchards to Singaporean food commodity group Olam International.

The fate of an additional $29 million raised by the sale is to be determined by a further court hearing.
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In a judgment delivered on Wednesday, Supreme Court judge Jennifer Davies said the growers' rights to the projects were worthless at the time the orchards were sold.

''The insolvency of the Timbercorp group and the cash flow deficiencies of the projects meant the projects could not be funded and that they were at imminent and inevitable risk of termination,'' Justice Davies said.

She supported an earlier decision by Justice Ross Robson directing Timbercorp's liquidators, KordaMentha, not to pay the growers $6 million offered by ANZ and BOS International in a compromise deal, saying the security held by the two banks entitled them to the entire proceeds of the sale.

Investors poured money into the four projects covered by the ruling, sold by Timbercorp in 2002, 2005, 2006 and 2007, in order to receive a hefty tax deduction.

They paid Timbercorp licence and rental fees on the orchards used to grow the almonds because they did not acquire the land or trees.

''It was essential for tax deductibility that the growers did not get rights as owners of the orchards,'' Justice Davies said.

She said that investors in the 2002 project only acquired property rights over the almonds they grew, and as no almonds were on the trees when the orchards were sold to Olam their rights were worth nothing.

Investors in the other projects also had a sub-lease over the orchard land, but Justice Davies found that these leases were worthless.

''Any prospect that the projects would have been continued was wishful thinking and unfounded in the reality of the situation that the growers found themselves in, regrettable as it was,'' she said.

Read more: http://www.smh.com.au/business/timbercorp-almond-investors-get-zilch-as-banks-take-all-20110616-1g5zz.html#ixzz1PiPn2BZU