Following an application by the Australian Securities and Investments Commission (ASIC), Justice Hansen of the Victorian Supreme Court today made orders against Allied Financial Pty Ltd, Wharton Partners Pty Ltd, Mr Stephen Lynne Wharton and Mr John James Gillies.

The orders prevent all parties from demanding the repayment of money allegedly loaned to franchisees of the Liquid Engineering Franchise by a company called Allied Securities Pty Ltd (Allied Securities).

ASIC sought these orders after becoming concerned that the defendants were not entitled to receive repayments from the franchisees.

Allied Securities purportedly loaned approximately $36 million to investors during 1998 and 1999 for the purchase of Liquid Engineering franchises. Allied Securities was placed into liquidation on 9 November 2001 as a result of proceedings brought by ASIC, with Mr Lindsay Maxsted of KPMG appointed official liquidator.

A company named Allied Financial Pty Ltd (Allied Financial) was incorporated in December 2001. In January 2002 ASIC learned that this company was claiming to be ‘the successor in law’ of Allied Securities, and was demanding loan repayments from the franchisees.

After commencing an investigation ASIC formed the view that there was no adequate evidence to support the claim made by Allied Financial that it was entitled to the franchisees’ loan repayments.

Mr Gillies and Mr Wharton are officers of Allied Financial Pty Ltd and of Allied Securities Pty Ltd (in liquidation). Wharton Partners Pty Ltd conducts an accountancy practice which employs Mr Gillies and Mr Wharton. The restraining orders will continue until further order of the court.

The defendants will next appear before the court on 6 May 2002.

ASIC’s investigation is continuing.