Great Southern receivers respond to conflict of interest claims
Great Southern’s receivers McGrath Nichol has responded to investors’ concerns about conflicts of interest relating to the responsible entity for the managed investment schemes, Great Southern Managers Australia Limited (GSMAL).
In a letter to investors, in which the Great Southern group was declared insolvent, the firm said it had received correspondence from a number of investors stating that McGrath had a conflict of interest as receiver of GSMAL.
“The existence of a potential conflict of interest is inherent in the position of an insolvent responsible entity. The same potential conflict of interest arises if a responsible entity is controlled by a voluntary administrator,” the firm said in response, adding that it was “used to requirements of balancing competing interests” in its capacity as professional appointees.
McGrath said it is conducting the receivership in view of its obligations under the Corporations Act — namely, duties of the responsible entity and its officers — “to the extent practicable given the financial position of the responsible entity”.
“We also remain in close contact with [the Australian Securities and Investments Commission] and the administrators, and will ensure that there is a suitable level of transparency in terms of our actions.”
GSMAL was declared insolvent by the receivers, with McGrath saying that it was currently the only party able and willing to provide “even limited funding to the responsible entity”.
The firm told investors that since its appointment as receivers, it has met certain expenses, as a temporary measure, to “preserve and protect” assets of the schemes.
The receiver is undertaking an appraisal of each scheme, which will result in either the winding up of the scheme or the appointment of a new responsible entity. In the event a scheme is wound up, the firm said investors can expect to receive the “value of any residual scheme assets”.
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