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Mayfair 101 Noteholders Set to Vote on Removing Invalidly Appointed Receivers from Mission Beach Property Trusts

MELBOURNE, AUSTRALIA: Mayfair 101 has invited noteholders to vote on the control of trusts which held the group’s real estate assets in Mission Beach and Dunk Island, after it was discovered receivers had been invalidly appointed by the trustee.

Mayfair 101’s lawyers have circulated voting forms this week to provide noteholders with the choice to remove the receivers of 15 property trusts which underpinned Mayfair’s ‘M Core Fixed Income’ product subscribed to by 128 noteholders between 2019 and 2020.

The security trustee of the M Core Fixed Income product, PAG Holdings (Australia) Pty Ltd, appointed Said Jahani and Philip Campbell-Wilson as receivers and managers in August 2020, in the absence of instructions to do so by the company’s noteholders.

The appointment of receivers was in contravention of the terms of the deed which governed the subscribed notes. Mayfair estimates the receivership has incurred over $1.5 million in fees without the noteholders’ consent, arising from the activities of the trustee, their lawyers and the appointed receivers. A further $4.9 million was incurred by receivers appointed over the properties held by the trusts, by a secured lender – Naplend – which Mayfair says it could have refinanced had the trustee not appointed receivers.

According to the M Core security trust deed, external administrators can only be appointed if a majority of noteholders instruct the trustee to do so. It has been revealed that the trustee acted without the authority of the noteholders, and Mayfair has been unable to find a single noteholder who instructed the trustee to make the appointment.

The 15 trusts previously held a portfolio of 130 freehold properties in Mission Beach including 145ha of freehold land on Dunk Island, and deposits on a further 100 properties, which formed part of a comprehensive $1.6 billion redevelopment of the Far North Queensland region.

In August 2020 ASIC issued proceedings to wind up the entity that issued the notes, labelled the real estate portfolio a “pile of sand” and the Dunk Island redevelopment a “pipedream”. The regulator’s campaign triggered hundreds of millions of dollars of losses to the group, yet the value of the real estate portfolio once held by Mayfair 101 has since grown by an estimated $170 million, leaving many noteholders irate at the regulator’s actions.

Of the 130 properties previously held by Mayfair 101, 24 blocks of land remain which Mayfair acquired in 2019 for approximately $6.6 million. Real estate values in the Mission Beach, Wongaling Beach and South Mission Beach regions have grown by an average of 74% since Mayfair first initiated its redevelopment plans for the region in mid-2019.

Mayfair 101’s Managing Director James Mawhinney commented:

“It is a diabolical situation that those we appointed to protect the interests of noteholders did the opposite and caused them serious harm. We were unable to refinance our Mission Beach real estate portfolio because administrators were appointed to the trusts. This cost the M Core noteholders tens of millions of dollars in default interest and administrator fees which were otherwise avoidable.

“Regaining control of the trusts will increase our options for returning capital to noteholders and put the brakes on further fees being incurred by the insolvency practitioners. I am confident the M Core noteholders will see the sense in this.”

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Mark Abernethy: +61 414 310 924


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