Matthew Backhouse

Matthew Backhouse is an APNZ news reporter based in Wellington.

Ross unable to cover receivership costs

The Ross Asset Management office in Wellington. Photo / Mark Mitchell
The Ross Asset Management office in Wellington. Photo / Mark Mitchell

Receivers for Ross Asset Management have signalled they will start selling off some of its assets because its founder does not have the means to cover the costs.

Investment adviser David Ross of Wellington was ordered to pay the costs of receivership after his companies were placed under the control of PricewaterhouseCoopers this month following investor complaints to the Financial Markets Authority (FMA) in a suspected ponzi scheme.

But receivers' lawyer Jenny Stevens told the High Court at Wellington today that Ross had insufficient means to cover costs - and those he did have were not sufficiently liquid.

She said receivers would have to sell some assets held by his companies to cover the costs, which totalled $153,683.49 to November 13.

Receivers have said Ross' companies have $11 million in assets out of the almost $450m placed with it by investors, and there was little likelihood of identifying more assets.

The receivership costs so far have included fees for PwC and law firm Bell Gully, as well as the costs of staff, record storage, rent, security monitoring and IT.

"The position is that Mr Ross' personal assets identified to date are insufficient to meet those costs," Ms Stevens said.

Ms Stevens sought an order allowing receivers to sell property owned or controlled by the Ross Group to recover costs.

She said the receivers and counsel had been "very conscious" of the costs, given the circumstances, and had tried to be as efficient as possible, including discounting their rates.

Ms Stevens said receivers were in the process of preparing an application to liquidate Ross' companies.

Ross' lawyer Gary Turkington said the receivers already had the right to sell the companies' assets and they did not need an order from the court.

Justice Steven Kos said the receivers could sell assets and he did not need to formally confirm that. He said there was nothing unreasonable in the costs presented to court.

FMA lawyer Hugh Rennie QC asked for preservation orders to remain in place until the next hearing.

In a memorandum to the court, he set out the reasons for Ross' companies being liquidated, including that they had led to major losses and may have been in breach of securities laws.

He said the powers held by liquidators were more extensive than those of the receivers.

The identified assets needed ongoing management with the objective of getting the best return, which was not achievable under the preservation orders, Mr Rennie said.

"It is in the interests of all investors that administration costs are minimised by proceeding to realisation of assets as early as possible."

Mr Rennie also asked the court to lift confidentiality orders which have prevented the public release of court documents to date.

Justice Kos agreed to extend the preservation orders until the next hearing on December 10, and allowed the confidentiality orders could be lifted on agreement from counsel.

Counsel have three days to make submissions on whether any information should remain subject to confidentiality orders.

Investor Bruce Tichbon, who is acting on behalf of more than 300 investors, asked for them to be included in proceedings, and also asked for the liquidation of the companies be put out to competitive tender.

Justice Kos said it was appropriate Mr Tichbon be heard, but he could not be further involved in proceedings until he applied to become a formal party to them.

- APNZ

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