A report from the liquidators of troubled investment group Mayfair 101 has found that investors are likely to receive no return once the company is wound up.
Liquidators from Grant Thornton found that the majority of funds raised by M101 Nominees – the issuer of the “M Core Fixed Income Notes” promoted by Mayfair 101 – were provided to Eleuthera Group to make real estate asset purchases, but that the likelihood of any recovery of the loan is low.
“It is my preliminary finding that in a winding up proceeding, creditors of the company (effectively the M Core noteholders) would receive no return,” said Said Jahani, one of the liquidators.
“However, the M Core noteholders may receive via the security trustee a partial return from the assets of other entities in the Mayfair 101 Group subject to the realisation process currently being undertaken in separate insolvency proceedings.”
But the majority of entities indebted to Eleuthera are the subject of separate insolvency proceedings, while a number of the remaining indebted entities are based overseas and the exact nature and recoverable value of the assets are “unclear”.
“My overriding conclusion on the company is that the business model of the company was not sustainable,” Mr Jahani said.
“This is on the basis that M Core noteholders were investing predominantly for periods of six or 12 months, however the loan agreement with Eleuthera had a term of 10 years. On this basis, the company would not have adequate funds to repay any contributions as they fell due and as such the company has been insolvent since inception and remains insolvent as at the date of this report.”
But Mayfair founder James Mawhinney said that the liquidator’s report doesn’t prove anything.
“The provisional liquidators report confirms yet again that there is no ‘smoking gun’,” Mr Mawhinney said.
“All monies raised have been put toward tangible investments and utilised in line with our disclosure documents. An astounding amount of government resource has been poured into looking for technical flaws in our structure and business activities to support theories of misconduct, which are simply untrue.”
Mayfair is planning to present a restructuring proposal “in the next few weeks”. The liquidator’s report shows that M101 raised some $65.6 million from investors, while M101 Holdings also raised $65 million through a similar investment structure that was marketed as an unsecured asset.
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