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Wednesday 16 September 2015

15-256MR ASIC seeks court orders to wind up Avestra Asset Management

ASIC has commenced proceedings in the Federal Court of Australia against Avestra Asset Management Ltd (Avestra), the holder of an Australian financial services licence and responsible entity or trustee of a number of managed investment schemes. Avestra's schemes are managed funds which invest in shares and other financial products.  ASIC understands the schemes comprise approximately $18.5 million under management.

ASIC alleges that Avestra has persistently contravened its duties in relation to a number of the schemes, including to:

  • act in the best interests of scheme members
  • exercise the required degree of care and diligence
  • do all things necessary to ensure that the financial services provided under its licence are provided efficiently, honestly and fairly.

Among other things, ASIC alleges that Avestra borrowed money on an unsecured basis from the property of its schemes, and invested scheme property in entities and offshore funds connected to its directors without proper due diligence or regard for the interests of members.

ASIC is seeking interim orders to appoint provisional liquidators or receivers to take control of Avestra's assets and report on, among other things, any suspected contraventions of the law, any losses suffered by scheme members, and whether the schemes ought to continue in operation (under a new responsible entity) or whether they should also be wound up.

ASIC is seeking final orders that Avestra be wound up on a just and equitable basis.

The first hearing of the matter is listed for Thursday 17 September 2015.


On 10 August 2015, ASIC issued an interim stop order in relation to a defective Product Disclosure Statement for one of Avestra's registered schemes, the Valensworth Fund. A final stop order was made by consent on 31 August 2015.

On 16 December 2014, Avestra was convicted and fined for breaching takeover laws, in relation to shares acquired by Avestra on behalf of various schemes. (refer: 14-339MR)

Frequently asked questions

Editor's note 1:

At the first return date on 17 September 2015, the Federal Court ordered that ASIC's application for interim relief be set down for hearing on 27 October 2015 at 10:15am.

Editor's note 2:

On 27 October 2015, the Federal Court appointed provisional liquidators to Queensland based Avestra Asset Management Ltd (Avestra) following an application brought by ASIC (refer: 15-313MR). The matter has been listed for further hearing on 11 December 2015.

Editor's note 3:

On 11 December 2015, the Federal Court made orders sought by ASIC to wind up five of the managed investment schemes of which Avestra is Responsible Entity:

  • Avestra Advantage Fund
  • Excela Australian Equity Income Accelerator Fund
  • Emergent Fund
  • Generator Fund; and
  • Maximiser Fund.

Richard Hughes and Simon Alexander Wallace-Smith (liquidators) will oversee the wind-up.

The matter returns to the Federal Court on 19 February 2016 to hear ASIC's application to wind-up Avestra.

Editor's note 4:

The Federal Court ordered on 19 February 2016 the liquidation of Avestra Asset Management Ltd. Richard Hughes and Simon Alexander Wallace-Smith of Deloitte were appointed liquidators for the purposes of the winding-up.

Two former Avestra schemes (Valensworth and Managed Investment Account Service) will continue to operate under a new responsible entity.

The matter returns to Court on 29 April 2016 for the hearing of any application by ASIC for leave to amend its originating process, join additional defendants to the proceeding and proceed against the company in liquidation.

Editor's note 5:

On 29 April 2016, the Federal Court made orders sought by ASIC to:

  • proceed against Avestra in liquidation;
  • join former Avestra directors Paul Rowles and Clayton Dempsey as defendants to the proceeding; and
  • amend ASIC's originating process.

ASIC will be seeking against each of Mr Rowles and Mr Dempsey declarations of contravention of the Corporations Act, orders disqualifying them from managing corporations, and financial services-related injunctions.

The matter returns to Court on 10 June 2016 for further directions.

Editor's note 6:

On 10 June 2016, the Federal Court made orders for defendants Paul Rowles and Clayton Dempsey to file their defences by 29 July 2016, and for any reply by ASIC to those defences to be filed by 19 August 2016. 

The matter returns to Court on 26 August 2016 for further directions.

Editor's note 7:

On 26 August 2016, the Federal Court made further orders for the parties to file amended pleadings and for mediation to be held by 14 October 2016.  The matter will return to court for further directions on 28 October 2016.

Editor's note 8:

On 10 October 2016, the Federal Court made orders for mediation to be held by 17 November 2016. The matter will return to Court for further directions on 25 November 2016.

Editor's note 9:

On 25 November 2016, the Federal Court made orders: 

  • for ASIC to file and serve its affidavit material by 10 February 2017;
  • for defendants Paul Rowles and Clayton Dempsey to file their affidavit material by 28 March 2017; and
  • listing the matter for trial, commencing 24 April 2017 on an estimate of five days.

The matter returns to court for a case management hearing on 31 March 2017. 

Editor's note 10:

ASIC and each of the defendants Paul Rowles and Clayton Dempsey have reached agreement as to the matters in dispute between them in the proceeding. 

On 26 April 2017, a hearing was held in relation to the penalties and other orders sought by ASIC against each of Mr Rowles, Mr Dempsey, and Avestra itself.   

The Court has reserved its decision. 

Last updated: 24/03/2016 12:00