An update on the liquidation of First Guardian Master Fund responsible entity Falcon Capital has shown that not only has FTI Consulting only been able to recover around $1.6 million so far, but this figure won’t even cover the liquidator’s remuneration.
According to the report, the liquidators consider there are “reasonable prospects of further recoveries and sufficient funds existing in the liquidation to satisfy both the priority liquidation costs and known creditor claims”.
“The liquidators have previously estimated that a net amount of approximately $446 million represents the outstanding value of cash invested net of redemptions by Unitholders. In effect, this would represent the potential quantum of Investor claims that would participate proportionately for any surplus funds that may exist in the liquidation after meeting the priority costs and known creditor claims,” it said.
FTI added that while it considers there is a reasonable prospect of a distribution to unitholders, it isn’t possible to “provide an estimate or range of what the quantum of any such surplus may be at this time”.
“The liquidators do however temper unitholders expectations and consider that only a partial return of unredeemed funds may eventuate,” the report said.
“In particular, the liquidators note the minimal recoveries effected to date, the nature of certain investments (being illiquid, intangible or in foreign jurisdictions), their contractual terms, and disputes that existed prior to the appointment of the Liquidators, thus considerable commercial and legal considerations and challenges exist in effecting recoveries.”
Ultimately, it said, there is no expectation for any distribution to creditors and unitholders to occur for at least 18 months.
Show me the money
The money recovered to date has predominantly stemmed from the recovery of $859,227 from Kanun Capital Pty Ltd as Trustee for the Kanun Capital Unit Trust, which is a niche lender to property developers providing predominantly mezzanine lending.
However, the accounts show the book value of that investment at more than $30 million, comprising $11.3 million to Kanun directly and $20.54 million indirectly through various solicitor’s trust accounts.
“The outcome of potential recoveries is contingent on various factors including market conditions,” the report said.
Another $450,000 has been realised from the liquidation of Fox Friday Brewing, with another $50,000 expected.
Falcon director David Anderson was a director of Fox Friday up to 7 March 2025 and an indirect shareholder through Humulus Holdings and First Guardian Holdings up to 15 January 2025, the report said.
Despite the investment being valued at around $29 million, including advances of $27.3 million being paid from Falcon accounts, other than the additional minor payment, the liquidator said “no further recoveries are expected from this investment”.
The final asset that has had some of its value recouped is the 2023 Lamborghini Urus that was in the possession of Falcon director Simon Selimaj, which Falcon had purchased for $548,000.
The supercar was sold through Slattery Auctions and, while the liquidators pegged the likely return at around $350,000 to $400,000 in July, it fetched $326,662 excluding GST and costs.
Accounts in the negative
According to the report, these recoveries left the collapsed firm holding around $2.84 million in cash as at 31 October 2025, while unpaid legal fees incurred total $1.05 million, the liquidators are owed $2.14 million, and another $138,000 for liquidators’ disbursements incurred and unpaid.
In total, it has left the Falcon accounts with a shortfall of $500,000, meaning some of the bills won’t be able to be paid and recoveries haven’t even started to reduce investor losses.
“Creditors and Unitholders will note that in effect, after the payment of accrued expenses in the Liquidation, there are presently no funds available to confidently progress the Liquidation, including in supporting ongoing investigations and actions that have the objective of enhancing Falcon’s position relating to assets and their recovery, including legal proceedings,” FTI said in the report.
“Despite the financial position, the Liquidators continue to take certain steps in the Liquidation. As noted above, the Liquidators have not been paid any remuneration in the liquidation to date and intend seeking approval of the Court for their remuneration to 31 October 2025.”
FTI provided a breakdown of its work and costs, detailing that it had spent a total of 3,548.8 hours across all aspects of its work on the Falcon liquidation, including around 1,500 hours on general and forensic investigations.
The update from the Falcon Capital liquidators is in stark contrast to the news that Shield investors could shortly see a distribution of funds in the range of $136 million, after the liquidators for responsible entity Keystone Asset Management announced that they had applied to the Federal Court to make an interim payment to unitholders.
In a letter to unitholders of the Shield Master Fund, Jason Tracy of Alvarez & Marsal said that he and fellow liquidator Glen Kanevsky have applied to the Federal Court for a direction that “we are justified in causing the SMF to make, and that the SMF is justified in making, the interim distribution under the Interim Distribution Proposal”.
A case management hearing to consider the application is set for 11 December, and could see the liquidators approved to sell off 75 per cent of the Bell Potter Securities holdings liquidated and funds returned to unitholders.
The equities are valued at around $181 million, which means investors could see as much as $136 million returned to them in the short term while further liquidation is underway.
“The Interim Distribution Proposal involves the sale of a significant proportion of the listed equities owned by Keystone as responsible entity of the SMF, being securities held through a custodian in an account with Bell Potter Securities Limited (the Bell Potter Securities),” Tracy wrote.
“The five (5) investment classes of the SMF hold differing proportions of Bell Potter Securities relative to each investment class’s total assets. The Interim Distribution Proposal will, therefore, involve unitholders in some classes receiving more than unitholders in other classes.”
However, the Advantage Diversified Property Class (ADPC) does not hold any Bell Potter Securities, meaning that any unitholders in the ADPC will not receive any distributions from the sale of these equities.
“We consider that the structure of the investment classes within the SMF, and the legal arrangements governing the rights of unitholders in each class, do not permit any alternative to this outcome,” the liquidator said.
“We are working to recover other property for distribution to unitholders in the ADPC, but the timing of a future distribution to the ADPC class (if any) is unknown.”
