The failed $740 million funds management empire overseen by flamboyant Gold Coast businessman Peter Drake lent $301 million to Mr Drake and his companies, administrators have revealed.
Administrators John Park and Ginette Muller, of FTI Consulting, said the loans were made from the LM Managed Performance Fund, which operated outside Australian company law.
The related-party loans, representing about three-quarters of the $397 million fund, included $17 million lent directly to Mr Drake, the administrators said.
They said they would apply to the Queensland Supreme Court on April 12 to take control of the fund as its receivers.
"MPF has to date been operating as an unregulated fund outside the Corporations Act," the administrators said. "The administrators are continuing to work with ASIC [the Australian Securities and Investments Commission] to address the regulatory concerns."
On Tuesday night, Mr Park said ASIC was concerned that because not all investors in the fund were from overseas it should have been regulated under Australian law.
He said LMIM had not resigned as trustee of the fund, despite a provision in the fund constitution that it must do so upon the appointment of administrators. He denied it would represent a conflict of interest to be appointed as both receiver of the fund and administrator of LMIM.
Mr Park and Ms Muller, who were appointed administrators of LMIM on March 19, appear to have backed away from earlier suggestions they would hand the company back to directors, possibly including Mr Drake, under a deed of company arrangement.
It would be "very rare" for a deed of company administration to be entered into in a large and complex failure such as LM, Mr Park said. He said administrators had been in regular contact with ASIC officers who "haven't indicated at all what their desired outcome is".
In a statement since removed from the LMIM website, Mr Drake, who also addressed LM staff on Tuesday, said the decision to enter administration was taken after a "relentless 10-month campaign of alarming and misleading statements to our domestic and international advisers and investors" by rival fund manager Trilogy.
He represented administration as the appointment of "independent and professional advisers", saying that "neither LMIM nor any of its funds are in liquidation or receivership".