Investment group Mayfair 101 has resumed interest payments to lenders in its IPO Capital subsidiary, nearly four years after the Australian Securities and Investments Commission’s attempt to shut down the group and ban its director.
Interest payments for the December quarter 2023 have been made in full to more than a dozen IPO Capital lenders who have patiently waited for the group’s liquidity position to improve after the regulator triggered hundreds of millions of dollars’ worth of damage to the Australian-owned and operated investment group.
The IPO Capital brand was launched in late 2015 as a funding vehicle for the group’s private equity investments that it sought to take public. In early 2017 the group transitioned IPO Capital to the IPO Wealth Fund, a managed investment scheme operating under an Australian Financial Services License (AFSL), despite having legal advice that the IPO Capital fundraising structure did not require an AFSL.
The group went on to make investments across a diverse range of asset classes including real estate, secured credit, fintech and tourism, accumulating more than half a billion dollars’ worth of assets including Dunk Island before ASIC initiated Federal Court proceedings in April 2020. The regulator labelled the group a Ponzi scheme, alleged monies were transferred to the British Virgin Islands and told the Federal Court its real estate assets were a “heap of sand”.
The regulator’s actions triggered insolvency practitioners to be appointed to over forty entities, creating a cascade of more than 20 court cases, and necessitating Mayfair’s protection of 570 clients who had loaned $211 million to the group via a series of debt instruments.
The group’s Managing Director, James Mawhinney, was at one stage banned for 20 years from dealing in financial products and banned from leaving the country, despite never being interviewed by ASIC, or being asked for the group’s financial statements or for a list of its investments.
Both banning orders made against Mr Mawhinney were overturned on appeal by three Federal Court judges who found the regulator’s case to be “mistaken” and “absurd”. The Full Bench found that ASIC’s case denied Mr Mawhinney procedural fairness, and yet the case was remitted. It is now scheduled for a two-week trial in October 2024.
After nearly four years the regulator has been unable to produce any evidence that monies were transferred to the British Virgin Islands.
The Mission Beach real estate portfolio once held by the group has since increased in value by an approximately $170 million according to CoreLogic data.
Mr Mawhinney, who has spent nearly four years fighting to protect his business, its investments and its lenders, said:
“The resumption of interest payments after nearly four years is in line with our objective of making all clients whole. These clients supported our group’s investment activities since inception and we are delighted to achieve this significant milestone for them against all odds. We are working toward achieving the same for our noteholders and are grateful for everyone’s patience while we get this terrible situation sorted out.”
Long term IPO Capital lender, Denny Bauman, commented:
“Receiving interest payments again after everything that Mayfair 101 has endured over the past four years is testament to the integrity of James Mawhinney and his team. They have my full support and should be commended for standing up to the corporate regulator to protect the interests of their clients.”
Marilyn Burton, a lender from Queensland, commented:
“Full credit to Mr Mawhinney and his team for following through on their commitment to resume payments to us. It proves just how badly ASIC mis-assessed his character. ASIC should be compensating Mayfair 101 for the hundreds of millions of dollars worth of damage it caused by acting on conspiracies rather than properly investigating.”
While defending against the actions of the regulator, Mr Mawhinney has been building several new businesses aimed at restoring the balance sheet of his corporate group. Last year he announced the launch of a new online network, Media.com, which verifies all user profiles and provides tools for individuals and organisations to manage their online presence.
These new initiatives, including various prior investments which the group still controls, have enabled the liquidity position of the group to improve. Further interest payments including redemptions are expected to resume in the coming months as value is restored and funding becomes more accessible.
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Mark Abernethy: +61 414 310 924