Allowed 10 days to sort out funds, observers to stay on

BUSINESSDESK: The High Court has given Pyne Gould Corp subsidiary Perpetual Trust 10 working days to come up with a plan to liquidate one fund and internalise another.

Judge Paul Heath today ordered Perpetual to figure out a way to wind down its frozen mortgage fund and internalise its cash management fund before another hearing on August 17, according to his judgment.

He also ordered observers, Vivian Fatupaito and Christopher Duffy of WHK, should continue in their role.

"At this stage there is a live issue over whether, in the form that internalisation is intended to take, the statutory supervisor (or some other form of supervision) should continue to be required, whether at the discretion of the court, or otherwise," the judgment said.

Perpetual's statutory supervisor, Trustees Executors, sought an order after the cash management fund was used to loan $28 million to the related Torchlight Fund No 1 LP, which is managed by Pyne Gould principal George Kerr.

"I am told by counsel that 'internalisation' of the cash fund is intended to restrict the allotment of units in that fund to investors which are, broadly, trusts of which Perpetual is a trustee, or other do not constitute 'members of the public'," the judgment said.

Perpetual froze repayments of its $56.2 million mortgage fund, which it now wants to wind up, after a surge in redemption requests after details of the cash fund's to the Torchlight fund emerged.

The loan has since been repaid by Torchlight, and Pyne Gould is now looking at ways to divest some or all of its Perpetual unit.

The repayment of the Torchlight loan means any concerns "arising out of the past conduct of those who were responsible for making the decisions to lend to Torchlight can now safely be left to the [Financial Markets] Authority or the statutory supervisor," the judge said.

"No further action is presently required from the court."

The judge kept today's hearing in the High Court in Auckland public because "it seemed to me important that the outcome of discussions between Trustees Executors and Perpetual should be aired in open court".

Trustees Executors said it had more concerns about Perpetual's behaviour, in particular a $3.3 million loan "to a company associated with Mr [Michael] Tinkler, who was then general counsel to Pyne Gould Corporation [Perpetual's parent], and is now a director of that company", which didn't receive a written application and has since been repaid.

Perpetual disputed aspects of the loan, and Judge Heath said it was not his role to resolve any of those issues in today's hearing.

"They can be addressed further by the statutory supervisor, and, if necessary, by the Authority, who may raise them later if they consider there is a need to do so," he said.

Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot


Sym Price Change
USD 0.7131 0.0007 0.10%
AUD 0.9350 -0.0035 -0.37%
EUR 0.6564 0.0011 0.17%
GBP 0.5880 0.0048 0.82%
HKD 5.5300 0.0039 0.07%
JPY 74.7250 0.3310 0.44%


Commodity Price Change Time
Gold Index 1262.4 -3.560 2016-10-24T00:
Oil Brent 52.4 0.660 2016-10-24T00:
Oil Nymex 50.5 -0.330 2016-10-24T00:
Silver Index 17.6 0.077 2016-10-24T00:


Symbol Open High Last %
NZX 50 6958.4 7006.2 6958.4 0.64%
NASDAQ 5306.5 5310.3 5309.8 -0.03%
DAX 10786.2 10827.7 10761.2 0.13%
DJI 18206.5 18229.0 18223.0 -0.02%
FTSE 6986.4 7058.1 6986.4 0.98%
HKSE 23581.7 23631.3 23604.1 -0.17%
NI225 17298.6 17381.8 17234.4 0.76%
ASX 5408.5 5455.7 5408.5 0.63%