Fears liquidation could spark Dunk Island and Mission Beach ‘fire sale’

The embattled funds manager is fighting an application brought by the corporate regulator to wind up the M101 Nominees Pty Ltd unit and has flagged it will put up a rescue scheme to investors shortly.

But the group failed to convince the federal court, which is hearing an application by the Australian Securities and Investments Commission to wind up M101, to give it an adjournment so it had more time to ready its turnaround plan.

“I‘m not satisfied … that there is a sufficiently viable, restructure proposal that presently exists,” Justice Stewart Anderson said.

He said whether there was a “viable” restructuring proposal was a matter to be considered ”down the track” when the corporate regulator’s wind up application is handled and is planning a February hearing.

The Dunk Island redevelopment has been plagued by controversy and senior lenders have stepped in to protect their interests with one group, Napla, taking control of 107 Mission Beach properties and the Bond family resuming control of Dunk Island.

M101‘s barrister Philip Crutchfield, QC, pointed to the pressing “commercial factors” that were in play for the restructuring proposal.

“It is plain as a pikestaff, your honour, that a liquidation would mean a fire sale of these assets and a zero return to the investors,” he told the court.

Mayfair founder and managing director James Mawhinney last week flagged that a restructuring proposal would be put up to investors and the company said it would keep ASIC and provisional liquidators Grant Thornton informed.

Mr Crutchfield said the restructure proposal would draw together an independent committee of “very experienced” practitioners and the fund manager hoped to finalise it shortly.

He said the “urgency” associated with the plan was that M101 was in default under a lender facilities and it was paying interest and other fees approaching 40 per cent on a $16.5m loan to senior lender Napla.

The restructuring proposal would see the refinancing of the Napla loan and the FIG loan, relating to Dunk Island, and the court head Mayfair was trying to put the plan in place “by Christmas”.

Mayfair argued for an adjournment of the hearing of the winding up application made by ASIC with Mr Crutchfield saying “all we’re asking for at the moment is the opportunity to finalise the restructuring proposal”.

If the plan won the backing of investors then Mayfair would go back to court to fight ASIC‘s application for a winding up on grounds including that it “would be disastrous to those who have the economic interest in the company”.

ASIC’s barrister Jonathon Moore QC said Mayfair did not need a full hearing to go off to some date in the “never never” when it could come back to court to present a restructuring proposal.

He pressed for orders for M101 to providing material by October 29 and the liquidators and ASIC responding next month.

Provisional liquidator Grant Thornton, which has taken charge of its M101, warned in the report to the court last month that even secured investors owed $67m could suffer substantial losses.

Grant Thornton warned there was a low likelihood of the recovery of $44.4m which was advanced to another Mayfair company, known as Eleuthera, which served as Mayfair 101’s treasury unit. Some $21.7m of this was used to pay a “large amount of operating expenses” of the group.

Mayfair said last week it had appointed Ashurst Lawyers to assist with the restructuring proposal and Mr Mawhinney said then was “bitterly disappointed” by the significant impact the events of recent months have had on noteholders and the Mission Beach community.

– with Lisa Allen

This article originally appeared on www.theaustralian.com.au/property.