Mayfair 101 Managing Director James Mawhinney has called for a Parliamentary inquiry into the Australian Securities and Investment Commission’s handling of Mayfair 101 in the wake of a legal settlement between liquidators appointed to the IPO Wealth Holdings group, Mayfair 101 and Mr Mawhinney.
Mayfair 101 previously presented IPO Wealth as an underdog in the Australian investment industry
In the settlement the liquidators have abandoned all claims against Mr Mawhinney and his companies, and Mayfair 101 has been reinstated with control over 80 percent of the assets the liquidators previously sought control over. Mayfair 101 says the settlement is worth approximately $44 million at cost.
The liquidators previously attempted to take control of valuable assets in three countries across six legal proceedings, after ASIC actively supported the liquidators and trustee in court to have the group of seventeen investment holding companies wound up.
The milestone settlement was reached in July 2022 and was approved by the Supreme Court of Victoria in November 2022, however the terms have been released to the public today.
Mr Mawhinney said:
“This is a monumental settlement which demonstrates the allegations against me were without merit. ASIC relied upon the liquidators’ mistaken claims, including allegations I had transferred investor funds to the British Virgin Islands, to attack Mayfair 101 on a misconceived basis. A Parliamentary inquiry is needed to get to the bottom of how this situation was allowed to occur.”
The IPO Wealth Fund raised approximately $120 million from qualified wholesale clients between 2017 and 2020, always meeting its obligations to unitholders before ASIC launched an attack on the investment group in March 2020.
On 22 May 2020 the IPO Wealth Fund’s trustee – Vasco Trustees – appointed receivers by alleging that Mr Mawhinney had transferred $18 million worth of assets to the British Virgin Islands to the detriment of the fund’s unitholders.
Mr Mawhinney subsequently wrote to the trustee and receivers to point out they had identified a change in assets on the group’s balance sheet but had failed to account for a corresponding change in liabilities, which meant the net position had not changed and the assets in question were actually paid for. However, the trustee and liquidators did not accept they were in error and continued to press for the division of Mayfair 101 to be wound up.
Just two days after the trustee and liquidators had been notified of their misreading of the balance sheet, ASIC applied to join the case as a ‘friend of the court’ and proceeded to support the trustee and liquidators to force the group into liquidation.
Today’s settlement announcement suggests the corporate regulator took the wrong position, supported false information when on notice of it, and aided the winding up of the IPO Wealth Holdings group to the detriment of 181 innocent Australian investors.
Under the settlement Mayfair 101 retains full control of two technology-related investments, worth more than $10 million at cost, of which the liquidators previously sought to dispossess Mayfair 101. Mayfair 101 resumes control of nearly three quarters of the assets previously alleged to have been misappropriated.
A prominent Melbourne-based businessman and long-term Mayfair client, said:
“I was always happy with my investment with Mayfair 101. I was always paid on time and in full until the liquidators and ASIC got involved. Full credit to Mayfair 101 and Mr Mawhinney for sticking to their guns to disprove the scandalous allegations. This settlement proves the IPO Wealth group should never have been wound up.”
Jan de Tastes was one of IPO Wealth’s earliest unitholders and was forced to move in with her son when the trustee froze redemptions and interest payments. She said:
“I find it incredible that ASIC, who is meant to be protecting investors, intervened in court proceedings to double-down on the allegations of Vasco and the liquidators when they were evidently mistaken. As innocent investors we ought to be compensated for the harm caused to IPO Wealth and Mayfair 101.”
During the widely publicised battle to stop the winding up of the IPO Wealth Holdings group Mr Mawhinney obtained formal written resolutions from 120 unitholders, of which 96% were in favour of replacing the trustee and ending the provisional liquidation.
However, despite being in receipt of formal directions from the majority of the fund’s unitholders, ASIC recommended Justice Robson reject them. Shortly thereafter, Vasco applied for a silencing order which blocked Mr Mawhinney from communicating with the fund’s unitholders until more than a year after the proceedings concluded.
Commenting on the favourable settlement for Mayfair 101 Mr Mawhinney said:
“The IPO Wealth settlement represents a significant win for Mayfair 101’s lenders. They have been without principal and interest payments for four years while we defend against the mistaken actions of the liquidators, Vasco and ASIC. This outcome means Mayfair 101 retains assets that over time can be managed to achieve our goal of making our lenders whole. I am grateful for their patience while we get this terrible injustice sorted out.”
Mr Mawhinney said he believed ASIC’s involvement in the IPO Wealth winding up proceeding was part of a campaign to take the IPO Wealth Fund out of the market. He said the settlement confirms ASIC’s investigation into his conduct was brought on a misconceived basis and ought to be discontinued.
“The settlement makes clear that ASIC, the liquidators and Vasco misrepresented the affairs of the companies, and mischaracterised my conduct and my character. They overrode the formal written directions of IPO Wealth’s unitholders who voted on putting Mayfair back in control of the assets, in favour of their own agenda.
“The liquidators have racked up more than $5 million dollars in fees, they subjected me to seven days of public examinations, and now they relinquish the vast majority of the assets they once asserted ownership of. This is a grave injustice for IPO Wealth’s unitholders considering the liquidators and trustee get paid ahead of unitholders.
“This situation impacted our business, our portfolio companies, their shareholders and staff, and even the residents of Mission Beach who agreed to sell us their homes. Mayfair 101 and all our lenders deserve compensation for what has occurred.”
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