According to The Australian newspaper, a tenth of the total A$400m (£207m, $307m) invested in the LM First Mortgage Income Fund has been returned to clients following the sale of five retirement villages which were held by the fund.
This news comes ahead of a hearing in which LM’s former advisers and founder, Peter Drake, are to be questioned by liquidators.
Drake will take to the witness box with former executive directors, Francene Mulder and Eghard van der Hoven, at Brisbane Magistrates Court next week in a string of hearings expected to run for several days.
Last year 320 investors, who are part of an action group known as the LM Investor Victim Centre, called for an investigation into the firm after it entered voluntary administration in 2013. According to the action group’s website, LMIM owe 12,000 investors across the world a total of A$750m.
Six former executives, including Drake, Mulder and Hoven, are also the subject of civil litigation over their alleged breach of directors’ duties before the LM group went bust.
The Australian Securities and Investments Commission (ASIC) claimed Drake had allegedly “used his position to gain an advantage for himself while the former directors had failed to act with the proper degree of care and diligence regarding transactions”.
Ernst & Young partners, Paula McLuskie and Mike Reid, who The Australian said were responsible for checking LM accounts, are also due to be questioned during legal proceedings.
In 2013, the Supreme Court of Queensland ordered the LM First Mortgage Income Fund to be wound up.
