Prime creditors to vote on liquidation

In a final report to creditors released yesterday, administrator Stirling Horne recommended winding up the trust's responsible entity, Australian Property Custodian Holdings. The company, which owned 12 retirement villages in Queensland, Victoria and NSW, went into administration late last year after one of the bank creditors appointed receivers.

The report revealed that the secured bank creditors are owed $310 million. Valuations prepared in June last year showed the banks would recover all their funds, though the administrator noted that the valuations were based on expected 2012 income received from the sale of units, which was "considerably higher" than what has eventuated.

The creditors' best option for a return is if they can wrest management rights for the villages away from the current operators and rights owners, Lend Lease Primelife. The valuations estimate the properties are worth an extra $100 million if the management rights are attached.

The rights were sold by the Prime Retirement founder, Bill Lewski, to Babcock & Brown Communities, now owned by Lend Lease Primelife, for $60 million.

The propriety of the sale is being pursued by the bank receivers through public examinations, and also by the Prime Trust Action Group, representing the interest of the 9000 unitholders in the once ASX-listed trust. National Australia Bank and CFAL are owed a total of $195 million, Suncorp is owed $72.8 million and Members Equity bank is owed $41.7 million.

Mr Horne also recommended that unitholders be admitted to vote as unsecured creditors, for an amount of $330 million.

He said because of alleged wrongful acts and defective disclosure, they would be allowed to vote on the management fee sale (which with interest had risen from $60 million to $88 million), $33 million paid to Mr Lewski when the trust listed on the ASX (with interest worth $48 million) and a further $195 million as a contingency amount for alleged misleading or deceptive conduct.

A further $29 million, most of it related to party creditors, has also been noted in the report.

In his report, Mr Horne said Mr Lewski had initiated legal action against Lend Lease Primelife for alleged improper management of the villages. Mr Horne expected litigation funding agreements would be in place before next week's meeting, to allow him to also take action against Lend Lease Primelife.

"We may be disposed to settle the claim if LLP were willing to allow the management rights and the villages to be sold as one," he said.

In his report, Mr Horne said there had been no unfair preferences, uncommercial transactions, unfair loans, or insolvent trading.

Senior executives of Lend Lease Primelife have gone to the Federal Court opposing a summons that they be examined by one of the receivers.