Earlier this week, FTI Consulting, which was appointed administrator of LM Investment Management in March, said, having reviewed the situation, it felt winding up the company would be in the best interest of investors and other creditors.
However, Sean Kelleher, chief executive of Dubai-based Mondial – one of the founding members of the Adviser Committee for Investors – said he was concerned about the costs of winding up the company.
“While there is no doubt FTI have done an excellent job and it would be hard to find another company which could have done it better, I don’t think paying the fees it would cost to wind up the company are in the best interests of investors,” he said.
Kelleher estimated that FTI is currently costing around A$2.4m (€1.6m, £1.4m, $2.1m) per quarter and that, given winding up the company could take up to a year, this could therefore mean a bill of A$10m.
Last month, International Adviser reported that Korda Mentha, trustee of LM’s flagship fund the LM Managed Performance Fund, had racked up costs of three-quarters of a million dollars in the first eight weeks of its appointment.
However, Kelleher was keen to point out that the ACI’s intention is not to try to have either company removed as administrator or trustee, but rather to ensure that investor’s interests are kept front of mind.
“The ACI want to become part of the conscience of FTI and the trustees KordMentha, so that when they make decisions the ACI, and of course of investors, are in their minds,” he said.
“We now have 23 advisory firms signed up, something which is a great achievement in what can be a very disjointed industry and with a further five firms on the point of joining. If those five firms join it will bring our representation up from around 40% to 50% of the investors in the fund. At this point we believe the administrators and trustee will have to listen to us.”
Kelleher also restated an earlier agreed objective of the ACI, that being the purchase of a A$250m loan against a key development project called the Maddison Estate. The mortgage is held by an Australian company called SunCorp.
“If we were able to buy the SunCorp mortgage the position of investors would almost certainly improve.”
Perhaps quite shockingly, Kelleher also revealed that some advisers are still seeking commission payments from LM for advising on the fund, rather than giving those up to help build a satisfactory resolution for investors.