Administrators of the failed Gold Coast fund manager LM Investment Management are considering handing the company back to its directors, including flamboyant chief executive Peter Drake.
Giving the company back under a deed of company arrangement (DOCA) would avoid liquidation and a full investigation of the collapse of LM, which had at least $750 million under management.
Investors in the LM group's funds are not creditors of LM Investment Management, administrators Ginette Muller and John Park of FTI Consulting said in a circular posted to the company's website. But the funds, which have been frozen, are under the effective control of the administrators.
Ms Muller revealed at a phone hook-up with financial advisers and directors of LM Investment Management on Tuesday morning that a DOCA was possible. She said it was "usual" for directors or another party to put forward a DOCA at a second meeting of creditors.
A first meeting is to be held on April 2 on the Gold Coast and a second meeting would normally be due within the next 30 days.
But Ms Muller said she and Mr Park planned to ask a court to extend by three months the date by which the second meeting must be held.
Asked whether the company could be placed in liquidation instead, Ms Muller said: "We don't see that as an option at this point, because if we did we wouldn't be going to the court to basically say: 'Hey let's get an extension to the convening period so we can look at all the options.'
"But having said that, it's possible and ... it's up to the creditors to decide the future of the company."
Ms Muller told the financial advisers they may be creditors of LM Investment Management because they are owed commissions for putting their clients into the company's funds.
"We've just made that assessment for the moment," she said. "Investors are not creditors."
She also revealed that administrators plan to ask Deutsche Bank for an additional loan on top of the $40 million it has advanced to the group's LM First Mortgage fund.
But Suncorp, which is owed $22 million by LM's troubled Managed Performance Fund, wants to exit its position and the debt will need to be refinanced, she said.