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17-450MR ASIC winds up Victorian land banking scheme
The Federal Court in Melbourne has ordered that a land banking scheme known as the Realestate Equity Investment Trust (REIT) and an associated company, Timeline Project Management Pty Ltd (Timeline), be wound up. Here is a link to the Orders of the Court dated 19 December 2017 (Orders).
REIT is a managed investment scheme that owns land located at Flinders Avenue in Lara, Victoria (Land). At least 82 investors have invested approximately $800,000 into the REIT scheme. Since 2013, investors have been making payments in respect of their investment to Timeline.
ASIC’s concerns included that:
- REIT had been operating despite it not having a validly appointed responsible entity;
- REIT appeared unviable given there had been no progress in, nor prospect of, developing the Land;
- financial statements for REIT had not been prepared or lodged with ASIC since 2012; and
- the interests of investors appeared to have been prejudiced by the operators of the scheme, including the dissipation of investors’ money by management to entities unrelated to the scheme.
ASIC Commissioner John Price said, 'ASIC will take action against unlawful managed investment schemes and the parties that run such schemes. Unlawful schemes such as land banking put investors' money at risk and investors should be very careful in checking whether schemes are legitimate before putting up their hard-earned money.'
Nicholas John Martin and Andrew Thomas Sallway of BDO Australia have been appointed as receivers of the property of REIT, liquidators of Timeline and to ensure that REIT is wound up in accordance with its constitution and the Court’s orders.
Mr Martin and Mr Sallway are required to undertake a range of investigations into the affairs of REIT and Timeline, including to:
- identify any assets and creditors;
- identify unitholders in REIT and verify the amount invested by each unitholder;
- determine the validity and value of any claims on the Land;
- determine the nature of any potential claims against Timeline or REIT; and
- once the pool of available funds has been determined, calculate the distributions that may be made to unit holders in REIT and any other creditors.
The Orders also provide that Mr Martin and Mr Sallway are to take all reasonable steps to procure an enforceable offer to purchase the Land from another company, Equitable Financial Solutions Pty Ltd.
Mr Martin and Mr Sallway will report to the Court by 9 March 2018.
The Court has listed the matter for a case management hearing at 9:30am on 20 March 2018.
If investors have queries about the winding up of REIT or Timeline they can telephone Daniel Rigg at BDO on (02) 9240 9784 or by email at Daniel.Rigg@bdo.com.au.
ASIC filed an application to wind up REIT and Timeline on 25 July 2017 (see 17-252MR).
This followed the cancellation of the Australian financial services licence held by Lotus Securities Pty Ltd (Lotus), the responsible entity that managed the REIT scheme until 21 September 2016 (see 16-337MR). Lotus was placed into liquidation on 14 December 2016, on the application of a creditor.
This proceeding is part of ASIC's wider and ongoing investigation into land banking schemes.
Editor's Note 1
On 20 March 2018, the Federal Court made further orders by consent. A link to the orders date 20 March 2018 is here.
Editor's Note 2
On 6 July 2018, the Federal Court made further orders by consent which sets out the process for claimants to make claims with the Receivers/Liquidators against REIT and Timeline Pty Ltd. Those claims will be determined by the Court at a hearing to be held on 13 March 2019. A link to the orders dated 6 July 2018 is here.
Editor's Note 3
The Receivers/Liquidators have advertised asking any party who considers that it has a claim against Timeline Project Management Pty Ltd, REIT and/or the land at 490 Flinders Avenue, Lara to prove their claim. The claims and supporting documentation are to be provided to: Daniel.email@example.com or C/-BDO, Level 11, 1 Margaret Street, Sydney NSW 2000 by 17 August 2018.
A link to the advertisement is here.