Not so Cryptic
Highlights lead to a bigger picture
Equititrust house of cards tumbles down
Anthony Marx, Courier Mail
October 23,
2011
THE email landed like a hand grenade in a living room.
"To not accept my advice is senseless. You will exponentially increase your liability to me," Mark McIvor wrote on September 28 to all but one of the directors of his beleaguered Gold Coast funds management firm Equititrust court documents allege.
The court documents claim board members were stunned by the threat. It prompted McIvor's long-time friend, David Jackson QC, to resign as a director and then-chief executive David Kennedy to respond by email that day.
According to the court documents Kennedy told McIvor that he was responsible for much of the company's problems and had now lost the support of everybody inside the organisation. McIvor's recent stress-induced behaviour was "irrational, ill-conceived, self destructive and dangerous", the email said.
McIvor, who launched the company in 1993 and remains the sole shareholder, had stepped down three months earlier from the board.
He still wanted to find new strategic partners and real estate opportunities to resurrect and restructure the firm's moribund $159 million Income Fund, which has been frozen since October 2008 and stopped paying distributions in April, according to the documents. McIvor even talked about launching new investment vehicles.
But, the documents state that with the fund suffering massive losses because of bad loans, the board remained focused on winding it down, selling assets and returning money to mostly elderly investors who had made it clear they wanted to get their cash back.
A $66 million Premium Fund is also shutting down.
The emails are included in a Supreme Court application filed last week by former board member
David Tucker, who wants an outside expert - insolvency practitioner David Clout - to preside over the funds' orderly dismantling.
Tucker alleges McIvor is
desperate to recover personal losses in the Income Fund through a series of new deals and is not "a fit and proper person" to oversee the windups.
The court documents, including Tucker's 44-page affidavit provides a rare glimpse inside an apparently dysfunctional company at war with itself. It chronicles in painful detail the unraveling of the working relationship between McIvor and his chief executive and board as the corporate climate grows increasingly poisonous.
"McIvor seemed to lose interest in the board resolutions, namely to
recover loans and pay money back to investors, but rather seemed to become more and more focused on his new strategy and vision," Tucker alleges.
The sworn statement alleges it was only in August that Kennedy discovered Equititrust and McIvor's personal company, MM Holdings, had borrowed up to $24 million from Westpac. The loan had never been disclosed to the board and Equititrust derived no benefit from it,
according to Tucker's affidavit.
"Similarly, McIvor is substantially indebted to the NAB for approximately $11 million. I know this because NAB is the financier to EIF (Equititrust Income Fund) and McIvor's personal debt had been openly discussed in meetings with NAB which I have attended," the affidavit says.
McIvor also promoted the repayment of $2.6 million to his superannuation fund ahead of the company's NAB debt, it is alleged.
Later,
Tucker claims in his affidavit, McIvor proposed releasing the three directors of embattled development firm Meridien from guarantees in relation to a $12 million loan made by the Premium Fund. In a September 9 email, it is alleged, McIvor said he wanted to secure the skills of Meridien director Russell McCart to manage assets in the deeply-troubled Income Fund.
But, as Tucker noted, in his affidavit,
Equititrust had launched legal proceedings against McCart and two other Meridien directors just two days earlier to recover the loan and to enforce caveats over their family homes. (Beneficiary of this legal work was a Tucker who was also a director of the company. He had a vested interest in the legal proceedings remaining on foot) (Then as a beneficial owner of the EPF Assets he had a vested interest in the sale of these peoples homes)
"I considered it wholly inappropriate that McCart, who owed the EPF (Equititrust Premium Fund) $12 million, be put in charge of assets of either fund," Tucker allegedly wrote.
(Note : Tucker and Kennedy then put themselves in charge of the assets of the EPF via their hidden ownership of MS Asia...)
"McIvor also said that the board agreed that he resigned to lead the new property manager with Russell McCart - this was just false. The board resolved no such thing, nor would it ever."
Undeterred, McIvor briefly started working in the office again last month but "that did not go well, as McIvor immediately ignored Kennedy's instructions, as Kennedy later reported to the board", the affidavit says. It is claimed McIvor then notified the board that he was working on a potential refinance deal, wanted to launch an "angel fund" to accelerate the departure of NAB and planned to sell his shares in Equititrust.
"By now, it was apparent to me from prior dealings and communications, that McIvor was not capable of exercising good judgment as to what was in the best interests of investors, that he lacked, or misunderstood, good corporate governance, and that he was more interested in seeking to restore his own lost subordinated investments, and prefer his own interests," Tucker alleges.
In a blunt response to McIvor about his plans, Tucker allegedly provided advice that was, as he described it, "without pleasantry or platitude".
"You have made some bad loans. Those loans have been mismanaged on your watch. You should walk away from Equititrust - it is, as the board has resolved, all about collecting the loans for the investors and returning investor money. That is what the investors now expect," Tucker's email alleges.
By this point, the relationship between the two men had become "strained" and McIvor ousted Tucker on October 12.
McIvor did not return calls seeking comment last week.
Originally published as
Equititrust house of cards tumbles down
http://www.couriermail.com.au/ipad/...d7aa64c99?sv=1cefd2ea9b6101ac0a852ae21c562c96