FTI Consulting said it made the recommendation in a report sent to creditors on 25 July and which will be presented to a second meeting of creditors on Thursday this week.
“In our view, the winding up of the company is the best option for creditors,” said FTI. “If creditors resolve to wind up the company, liquidators will be appointed to realise the company’s assets for the benefit of creditors.
“This option also allows voidable transactions, insolvent trading, breaches of director duties and other offences to be investigated more thoroughly. If the company is wound up, creditors with guarantees from the company’s director(s) could pursue the director for those debts immediately.”
The proposal follows the appointment of John Park and Ginette Muller of FTI Consulting as administrators on 19 March.
FTI said, at this stage, the estimated dividend to creditors for winding up the company is unknown although it was able to confirm that the book value of the company’s assets is only A$7.934m (£4.7m, $7.1m, €5.4m).
‘Directors guilty of various offences’
“We anticipate a dividend to creditors may be distributed in liquidation, however at this stage we are unable to quantify the amount of such a dividend due to the commercially sensitive nature of the property-related assets of the company and the unknown recoveries in relation to voidable transactions,” the administrator said.
FTI added its investigation had also found some evidence to indicate the company may have been trading while insolvent for a period and “entered into certain transactions that may be voidable against a liquidator”.
Furthermore, FTI said some LMIM directors may be “guilty of various offences committed prior to the appointment of the administrators”.
The full creditor’s report will not be made public until it has been put before the creditors meeting and “a number of ongoing legal matters have been resolved,” said FTI.
Look out for reaction from this group on this latest development…
This article was update on 30 July to refer to administrator rather than creditors
