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Insolvency practitioner Ginette Muller of FTI Consulting has had plenty of time over the weekend to think about the well-deserved judicial kicking she's received from Queensland Supreme Court judge Jean Dalton over her role in administering the LM funds management empire formerly run by Peter Drake.
Justice Dalton's judgment on Thursday reflected long-standing concerns about the way Muller and fellow FTI partner John Park have taken care of business since Drake and his fellow directors appointed the pair administrators of a key company in the LM group, LM Investment Management.
Her Honour said Muller and Park had "demonstrated a preparedness to act in a way inconsistent with those owing duties as responsible entity and trustee under the Corporations Act" and sworn to matters which were "not consonant with reality".
And there was an extra dollop for Muller, who Her Honour said made "unprofessionally robust and partisan" statements and swore an affidavit that was "sniping and argumentative".
The judge took control of LM's First Mortgage Income Fund away from Park and Muller, instead appointing David Whyte of BDO as receiver of the fund.
Making things worse, on Friday corporate watchdog the Australian Securities and Investments Commission put out a press release pointedly extracting some of the ruling's juiciest criticisms.
Muller should resign from LM Investment Management and consider taking a permanent vacation from the insolvency trade.
It doesn't seem likely. Park said an appeal was being considered and pointed to Muller's "unblemished professional record", saying FTI had "complete confidence in the professionalism and integrity of our directors".
Suit cut to shreds
"Always bet on black," Wesley Snipes said in the 1992 cult classic Passenger 57. But, even before he went to jail for tax evasion, backing Snipes seems not to have been such a sure thing.
A group of mystery investors who backed Snipes' vehicle Game of Death (2010) and two other films, mediaeval-themed Ironclad (2011) and Robert Rodriguez's gorefest Machete (2010), have lost a legal bid to recover more than $US25 million ($27 million) loaned to producers.
Representing the investors was film financier Alastair Burlingham, while on the other side was financial services outfit Marlborough, led by Nick Hannah.
The stoush came to a head a little over a month ago in the Royal Court of Channel Islands tax haven Guernsey.
Investors claimed Hannah and three other Marlborough directors, David Enevoldsen, Adrian Howe and Ben Tustin, breached duties as directors of the company used to fund the films, Perpetual Media Capital, by causing the company to fund the films through loans which have never been fully repaid. Not so, the defendants said, pointing to a clause in Perpetual's constitution that indemnified the directors from any liability.
Deputy Bailiff Richard James McMahon found the defence as complete as Danny Trejo's slaughter of the bad guys in Machete.
"As a result, the effect of this determination is that the plaintiff's action is dismissed in its entirety," he said.
Miners beaming
Reports are still dribbling out from last week's Diggers & Dealers mining knees-up in Kalgoorlie, where the partying was still hard even if the gold price has gone soft.
While the price of yellow stuff is down 30 per cent in the past 10 months, some saw grounds for optimism in the shape of a potential change of government.
As local accountant, publican, mining investor and "King of Kalgoorlie" Ashok Parekh proclaimed at one dinner: "The glass is half full now, and it will be even more full after September 7!"
Even Andrew "Twiggy" Forrest's private jet blocking the path of the commercial variety wasn't enough to get executives annoyed.
Funds manager David Paradice reportedly had to bunk in at the backpackers for one night after flying in with his team.
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Frequently Asked Questions about this Article…
Queensland Supreme Court judge Jean Dalton heavily criticised insolvency practitioners Ginette Muller and John Park for how they administered parts of the LM funds management group. The judge found they acted in ways “inconsistent with those owing duties as responsible entity and trustee” and said some sworn statements were “not consonant with reality.” The court described Muller’s affidavit as “sniping and argumentative.”
The judge removed control of LM’s First Mortgage Income Fund from Muller and Park and appointed David Whyte of BDO as receiver of the fund. That means an independent receiver was put in charge of managing the fund’s assets instead of the previous administrators.
The corporate regulator ASIC issued a press release highlighting some of the court ruling’s strongest criticisms of Muller and Park, drawing public attention to the judge’s findings about their conduct in administering LM entities.
According to the article, John Park said an appeal was being considered. Park also pointed to Ginette Muller’s “unblemished professional record,” and FTI said it had “complete confidence in the professionalism and integrity of our directors.”
When a court appoints a receiver for a managed fund, that receiver takes control of the fund’s assets and day-to-day management to protect interests of creditors and investors. In this case, David Whyte of BDO was appointed to manage LM’s First Mortgage Income Fund after the court removed the previous administrators.
A group of investors who had loaned more than US$25 million to film producers lost their legal bid in the Royal Court of Guernsey. The court found in favour of Marlborough and its directors, and Deputy Bailiff Richard James McMahon dismissed the investors’ action, in part because Perpetual Media Capital’s constitution included an indemnity for the directors.
The case illustrates that film financing carries legal and recovery risks: loans to producers may not be repaid and investors’ attempts to recover those funds can fail in court, particularly where company constitutions or indemnities protect directors from liability, as was central to the Guernsey ruling.
The article reports that, despite the gold price being down about 30% over the previous 10 months, many attendees at Diggers & Dealers remained optimistic — citing a potential change of government as a positive factor. The coverage included colourful conference anecdotes but emphasised a mix of caution on commodity prices and continued investor optimism in mining circles.
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