Voluntary administrators have been appointed to a beleaguered Australian firm that controlled a frozen mortage fund which New Zealanders had more than $100 million tied up in.
Thirteen hundred New Zealand investors had put money into the Currency Protected Australian Income Fund run by Queensland-headquartered LM Investment Management.
This fund acted as a feeder into LM First Mortgage Income Fund, which has a number of commercial Australian property investments but was frozen in the wake of the global financial crisis.
At the time of the freeze in March 2009, New Zealand investors had A$95 million ($119 million) in this fund, although LM said last year they will now only get around 59c in the dollar back.
A spokesperson from LM said today that first repayments of capital had been made to investors earlier this month
But further redistributions could now be delayed after it was announced today that voluntary administrators had been called into LM by its directors.
A statement from the administrators, John Park and Ginette Muller of FTI Consulting, said they would co-operate with LM's senior management to "produce a comprehensive strategy to meet all obligations to its investors and creditors".
A spokesperson from FTI this morning could not comment on a timetable for the voluntary administration nor if payments would be delayed.
LM was founded in 1993 by expat New Zealander Peter Drake and claims to have assets worth more than A$3 billion under management.
The company was forced to go on the PR offensive last year after another Australian fund management firm, Trilogy Capital Group, attempted to take over two of its funds.
While Trilogy criticised LM's management of the First Mortgage Income Fund and said it lacked a clear strategy, the latter responded by calling Trilogy a "corporate fund raider" and accused it of spreading misinformation.
Trilogy successfully replaced LM as the responsible entity for one of the funds it had eyed up following a meeting held in Sydney in early November.
Correction: An earlier version of this story said no repayments of capital had been made to investors since the fund was put on ice in 2009.By Hamish Fletcher @hamishfletcher Email Hamish