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Ross Asset receivers consider selling assets

A group of investors in the failed Ross Asset Management group has asked the High Court for it to be admitted as a party to proceedings and called for the liquidation of the companies to be put out to tender.

And receivers may need to start selling assets to cover their costs, but what assets there are is uncertain.

PwC receivers’ costs to November 12 total $153,683.49.

In a brief appearance at the Wellington High Court today, PwC’s lawyer Jenny Stevens said a sale of assets was on the cards.

However, she later told NBR ONLINE she is unsure exactly what assets RAM has and what assets would be included in any sale.

A tentative new date of December 10 has been set for the Financial Markets Authority to update the High Court on the RAM receivership, by which time receivers PwC is expected to have applied to liquidate the group.

At a brief hearing in the High Court at Wellington today, Ms Stevens - acting for receivers John Fisk and David Bridgman of PwC - sought an order allowing them to sell property owned by the Ross Group to the extent necessary to pay their fees.

There were insufficient liquid assets from the group's owner, David Ross.

Mr Fisk told BusinessDesk the application to put the group into liquidation would be made this week.

Also at the court today, Bruce Tichbon, who represents more than 50% of investors in David Ross's group of investment companies, sought to be admitted to proceedings.

In Mr Tichbon's memo to the court he also sought for any liquidation to be put out to tender with a clear brief on strategy and costs.

Members of his group had observed receiverships and liquidations "where professional fees have devoured all the money left over", he said. The tender for liquidation should clearly state "how investors' interests will be represented".

Wellington fund manager Mr Ross, whose businesses were frozen after missing investor payments, has told PwC not to expect to find any other assets other than the $10.2 million plus $200,000 in cash deposits initially identified by Messrs Fisk and Bridgman.

Mr Ross talked to the receivers after being released from hospital after three weeks of compulsory treatment under the Mental Health Act.

The receivers have said they will focus on collecting information from brokers and reporting to court today as the next step of their management. They have already indicated they see liquidation of the Ross group companies as the appropriate step.

The Serious Fraud Office launched a formal investigation this week, having helped the FMA with its own inquiries since October 25.

Mr Ross, formerly a share broker, managed funds on behalf of 900 privately wealthy individuals, with management fees averaging $4.4 million a year paid in each of the last three years.

The PwC investigation found inadequate record-keeping and has been unable to source much of the documentary evidence for trading and investment holdings that it needs to complete a full picture of what looks to have the characteristics of a ponzi-style scheme, where investors were paid out at least in part using other investors' funds.

It suspects many or most of the trading history disclosed to clients was "fictitious".

The Ross group's database purports to show investments worth $449.6 million, of which $152.4 million is said to be held in Australian investments, another $136.1 million in Canada, some $156.4 million in the US, $3.8 million in New Zealand and $943,332 elsewhere.

Of this, some $437.6 million was held by a Ross group subsidiary, Bevis Marks.


More by Blair Cunningham and Jonathan Underhill

Comments and questions

Why bother putting the liquidation out for tendering? The end result will be the same. The suits will hoover up what they can. All for themselves.

I agree. They will all have a huge drink at the trough, and just when the finance company stuff was drying up. A real windfall for Xmas - already incurred $160,000 in costs. There will be nothing left by the time they are finished.

I think it would be approriate to appoint the investors, all 900, as liquidators. In that way when it all turns to custard the country will see why the chaps/ladies in suits are actually quite useful, even with their fees.

Why even put RAM and Ross into receivership or liquidation if there is to be nothing left at the end?

Apart from the fees to PWC, etc.

Liquidators and Receivers have archaic powers under the law and they can get RAM investors to pay back money that did not come to them from earnings but rather other investors' money.

And guess what, this scenario gives them the opportunity to earn more fees.

While the investors in this debacle are unlikely to get much back that is no reason to let the receivers or liquidators go to it as they have done in the recent past. PwC has had a field day with more than half of all the finance company collapses. There are a lot of people far from happy with their modes operandi, and complaints and actions are pending.
Get the liquidation put to tender if you can. It is a good first step.

Absolutely agree! This time it's not going to be so easy for PwC!

Total outrage!
Now we have lawyers representing the receivers! More of the investors' money spent. Who are the winners out of all this? PwC. They are loving it.

As an investor, I would rather lose the little money we are bound to get back anyway and not give PwC the honour and the HUGE fees they will get for liquidating the company!

Who appointed PwC? Was it the FMA? Perhaps they should pick up the tab?

I agreee. There needs to be an investigation into how one month PWC can audit and sign off all is fine with these companies and the following month get appointed as receiver when they collapse.

i don't think anyone said they did an "audit and sign off all is fine with these companies".
One of the findings in the initial report is that *no* auditing of RAM appears to have been done by anyone recently.

PwC - bah humbug!

Who is getting after the fees and the Ross's personal assets? I'll bet they are not fabricated. The Ross trusts should be placed in statutory management also. Get after them before they vanish!

Chapman Tripp's advice to Ross should be: "Show some (vestige of) honour by selling down personal assets and making a distribution."

Why is 105 Woburn St, Lower Hutt, not on the market yet?

The problem is the incomplete records. PWC could spend a lot of wasted time and money and get no further. The simple solution is to establish who put how much in and took how much out and then divide the remainder on a percentage basis allowing for voidable preferences. Otherwise, it will take years and PWC still won't know the complete picture.

I think that is what PwC is trying to do. The problem is that it is not clear how much was put in and by whom, and how much was taken out and by whom, and even how much is left and where it is. Your "simple solution" is, in fact, very complicated due to the apparent incompetence of the people running the business.

No point blaming PwC or any receiver or liquidator for the cost associated with sorting out the mess.

Shift the focus back to what the likes of David Ross and Allan Hubbard did in the first place. If it costs $5m to unravel the mess, that's what the judge should take into consideration when considering the appropriate penalty.

Don't blame PWC, the lawyers or the judges. Blame the investors for believing that some one could pay an interest rate far above the banks. Sheer greed got them into the mess. My advice is to just wind RAM up and get on with life.