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LM trustees KordaMentha get access to failed fund’s books

RECEIVERS to LM Investment Management’s largest fund, Managed Performance Fund, will soon get access to the majority of the books and records of the fund that was once worth $400 million.

In a report to creditors obtained by The Australian, receivers KordaMentha, also trustees over the fund, described gaining access as an “important step forward”.

“While the trustees hold some frustration that a similar proposal put forward by the trustees some 18 months ago was not agreed to then, the agreement reached is positive,” the report, issued last week, said. “The trustees anticipate that full access to all books and records of the fund shall be available in the coming weeks,” KordaMentha said.

The move follows an extra­ordinary step by the Supreme Court of Queensland to order that a receiver be appointed to manage the books and records of the ­company.

Gold Coast financial services and property house LM Investment Management collapsed in March 2013 leaving the tens of thousands of investors in both MPF and the First Mortgage Fund in the lurch.

MPF was the owner of a mortgage over LM’s largest development, Maddison Estate in the Gold Coast hinterland, which was once billed as having an end value of $1 billion.

The books and records of the company’s funds were previously under the control of FTI Consulting, receivers to the headstock LM Investment Management, but the intermingled nature of the ­accounts meant that FTI could not legally release the books of any one fund without divulging details of other related funds.

It’s not all good news for investors in MPF, however.

The report also reveals that KordaMentha’s attempts to obtain the working papers of the auditor of the fund have been blocked by the Australian Securities & Investments Commission, frustrating a potential claim against the auditor.

The Australian has previously reported that it is understood the auditor is assisting ASIC with its investigations into the collapse of LM.

ASIC is pursuing civil action against recently bankrupt company founder Peter Drake and other company directors, alleging they breached their directors’ ­duties. Mr Drake and the directors plan to vigorously defend the claim.

KordaMentha is also chasing Mr Drake over a $27m personal loan he allegedly took out from the company.

Mr Drake has consistently said he did not take out of a loan from the company.

He could not be reached for comment yesterday.