Westpoint Mezzanine crack down

The Australian Securities and Investments Commission (ASIC) is again cracking down on Westpoint Group, filing an application in the Federal Court in Perth for the winding up and appointment of a provisional liquidator to a related company, Ann Street Mezzanine.

ASIC said it was concerned that, despite Ann Street Mezzanine raising approximately $72 million in promissory note financing from approximately 840 investors, there had been little progress in construction work on their Ann Street site in Brisbane.

ASIC argued the appointment of a provisional liquidator would help to safeguard the interests of investors.

Previously, ASIC had applied for the winding up of the group’s York Street Mezzanine, and for a provisional liquidator to be appointed to that company.

According to ASIC, the development at 2 York Street in Sydney, for which York Street Mezzanine was raising money by issuing promissory notes to the public, was suffering a significant shortfall of assets over liabilities that endangered the investments of 900 investors, estimated to total over $75 million.

ASIC has also applied for Federal Court orders for other Westpoint Group companies — Westpoint Corporation, Westpoint Constructions, Scots Church Development and Bayview Port Melbourne — to lodge outstanding annual financial statements.

This follows applications for five other Westpoint Group companies and three managed investment schemes operated by Westpoint Management to lodge outstanding accounts and financial statements.

Meanwhile, Bayshore Mezzanine, another company in the Westpoint Group, is seeking orders in the Supreme Court of Western Australia against ASIC. This action commenced shortly after ASIC issued a letter of demand in April 2004 to Westpoint Group’s solicitor that companies in the Westpoint Group cease all promissory note fundraising.