Clode's failed development may impact First Step investors
Investors in Money Managers’ First Step trusts might face further losses as the trust’s investment manager stands to lose up to $36 million on a failed Onehunga development.
Receivers for Retail on Main, BDO Spicers, said the company owed Financial Trust $36 million as at March 31 2009.
Financial Trust made investments for the First Step trusts as the trustee for a further layer of lending trusts invested in. Financial Trust is directed by Money Managers founder Doug Somers-Edgar, who also owns the firm, through trustee Cadmont Holdings, alongside interests associated with Money Managers’ shareholders Russell Tills and Gerald Siddall.
Financial Trust called in the receivers to the development company on April 3, after Retail on Main shareholders had voted to put the company in liquidation in January.
It is likely that Financial Trust will recoup at least some of its $36 million because Retail on Main still owns 51 residential apartments and 6 commercial units at the Atrium on Main development and another 4 apartments at a second Onehunga development.
A spokesman for First Step said the company was vigorously working to endeavour to get the loan back.
But BDO Spicers have not provided forecasts of creditor returns.
They are working on a managed sell-down of the residential apartments and commercial units, while some of the apartments are being rented out.
Inland Revenue was owed $615,586 for unpaid GST – the payment of this is solely dependent on the level of collections achieved from accounts receiveatble and inventory.
This news comes just three months after First Step investors were told to expect a likely cash shortfall of $97.7 million on their investments, up from a $38 million provision made for losses in 2007.
There was $457 million in the First Step funds when they closed in late 2006, and investors have been repaid $223.5 million of the $330 million of their money that was invested.
Ex-Olympian Brent Clode is the sole shareholder and director of Retail on Main – liquidator Mr Cooper is his brother-in-law.
Twenty of Mr Clode’s companies were put into liquidation on November 5 with responsibility for these handed over to Mr Cooper.