LM 'spin' on insolvency erased, asset seizure posed

Administrators of failed Gold Coast funds manager LM Investment Management have erased from the company's website statements claiming the appointment of insolvency practitioners was "a proactive approach by the board to officially bring in independent financial advice across the company and the funds".

In fact administrators John Park and Ginette Muller of FTI Consulting are not providing advice but are in control of the company.

Since being appointed on Wednesday, Mr Park and Ms Muller have frozen LM's five Australian funds, totalling about $750 million, and are believed to be investigating if they can seize control of the group's web of offshore entities.

Soon after their appointment, Mr Park and Ms Muller had a long meeting with investigators from the Australian Securities and Investments Commission, which is investigating LM.

In an unusual strategy for administrators of a large group with retail investors, they have said little since their appointment. They declined to speak to BusinessDay.

The single largest asset of LM's managed performance fund is believed to be a $240 million second mortgage over Maddison Estate, residential land in the Gold Coast hinterland that is being developed by LM founder and chief executive Peter Drake. Mr Drake did not answer a call on Sunday and BusinessDay has been unable to ascertain if he is in the country.

Lawyers are also circling the stricken group, with Piper Alderman investigating the possibility of a class action and Slater & Gordon focusing on financial planners who tipped clients into LM's products.

In a letter to investors dated March 20, LM's directors also said the $12 million Australian structured products fund would not be affected by the administrators' appointment. The letter, removed from the LM website on Thursday, is signed "the directors".