Administrator investigates $17 million loan to LM Investment Management founder
The controversy surrounding Gold Coast-based funds management firm LM Investment Management has continued, with administrators revealing the business lent its founder, Peter Drake, a loan worth $17 million.
The company has already been accused of breaching Corporations Law by ABC's Four Corners. The collapse has meant investors face exposures worth more than $740 million in total.
In its first report on the investment company, administrators from FTI Consulting said the firm had lent a total of $301 million to Drake and his companies, and had raised $740 million from retail investors. The loans were made from the LM Managed Performance Fund.
In total, LMIM loaned six parties millions of dollars, according to the report:
Peter Drake – $17 million
LM Administration – $200,000
LM Capalaba – $18 million
Maddison Estate – $249 million
Australian International Investment Services – $15.7 million
Aalto Apartments – $1.7 million
The administrators are currently reviewing all the loans, but say the most significant project under review is the Maddison Estate Development, which was lent $249 million. This was the main vehicle of the company's LM Managed Performance Fund.
An FTI Consulting spokesperson told SmartCompany investigations into the loans remain ongoing.
"There are various issues around the regulatory status of MPF [Managed Performance Fund] that have been raised by ASIC," the administrators say in the report.
"In particular, MPF has to date been operating as an unregulated fund outside of the Corporations Act."
The $740 million in LMIM assets is in the form of cash, foreign currency, direct real property, commercial loans secured by first or second mortgages and listed shares.
The company was founded by Drake in 1997 and on March 19 this year administrators John Park and Ginette Muller were appointed.
The first meeting of creditors was held yesterday afternoon in Broadbeach and the administrators announced they are seeking an extension of the standard 30-day period allowed before a second meeting.
Administrators told creditors they have petitioned for a 90-day extension due to complex company structures, as they need more time to complete their initial investigations.
The administrators also intend to apply to the Queensland Supreme Court on April 12 to take control of the LM Managed Performance Fund as its receivers, due to concerns over the legality of its operations.
This article originally appeared on SmartCompany.