Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

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Insolvency, a predatory practice – GPL Liquidation (Part 3) – ANZ theft becomes $196M or $32k ea from 6,000 investors!

A longer article (in parts), on the Liquidation of Gunns Plantations (GPL), and the disclaimed Managed Investment Schemes (MIS) trees grown on Gunns (GNS) freehold land. MIS growers’ trees were sold in a joint sale with Gunns (GNS) Tasmanian assets. PPB Advisory (PPB now part of PwC) (lawyers Arnold Bloch Liebler (ABL)) acted as Liquidator of GPL in its personal capacity, and as Responsible Entity (RE) for the MIS schemes. KordaMentha (KM) (lawyers Ashurst), acted as Receivers and Managers for Gunns secured creditors (the ANZ Capel Court bank consortium.) 

3.1 But MIS grower-investors were not at fault 

Gunns Plantations MIS grower investors were not shareholders of Gunns Ltd and the collapse of Gunns was not of their making. Growers owed nothing and had they defaulted on payments, their scheme assets were transferred to Gunns. The Receivers’ Joint Sale Process, however, exposed growers to Gunns liabilities and the costs of tidying up the whole mess.

Adverse findings against Gunns Directors and Officers, or Auditors KPMG, would have supported a separate MIS valuation being respected, unencumbered by the pooling with the Receiver-held Gunns Ltd assets. The prudence of the bank consortium would have been questioned too, given they had routine access to Gunns books at each extension of the loan facility. Any DO and A culpability was to be determined at a future date, and after the plundering of growers’ assets. 

As of 1 Feb 2019, and five years later, no fewer than nine directions hearings have been listed in the Supreme Court of Tasmania for SC TAS 2015 1355, Gunns & others v KPMG & others. The trial hearing is currently set down for 16 Sep 2019, giving auditors, KPMG, another 9 months to mediate in private without suffering the inglorious glare of a public hearing. 

The Gunns Annual Report 2018 declared Gunns insolvent from 6 March 2012, a full 6 months before entering voluntary administration. It makes no mention of the Pulp Mill Opportunity liability to growers, but states “It is unlikely that there will be any return to unsecured creditors”. PwC has failed to confirm whether any claim for growers is tabled. Late in proceedings they revert to similar tactics as they use at the start of them – that is, just don’t respond.

On entering administration, Gunns Plantations was a separate company with its own Board and solvent. According to its last Annual report it held $99M of net assets including $84M of current assets held by Gunns and comprised of surplus grower proceeds swept from GPL’s accounts. It had provided for maintenance with a $23M reserve and held an undrawn $4M loan facility its own right.

GPL management was of the view that it was far from “hopelessly insolvent” as characterised by the Liquidators, and that services relied upon from Gunns could be filled by external private providers, as did Macquarie Bank. GPL management supported an alternate RE proposal by Macquarie, noting that the MIS estate held the very certified product that the export market was choosing over native timber – some harvest ready each year that would keep the schemes viable. The Macquarie exercise captured the overwhelming preference of growers. Across schemes from 2002-2008, 62-82% of eligible voters voted and 97-99% of them were in favour of the restructure. Predictably, the Macquarie proposal was challenged and quashed by the insolvency kleptocracy. Far be it from them to break from script and forgo their eye-watering fees.

The Receivers’, acting for the banks, attitude was ‘you’re in this with us pal’. Their senior counsel’s “growers are looking for a get out of gaol free card” did prompt an inappropriate objection from me. The inevitable capture of the $84M and $23M under fixed and floating charges, and then the Receivers claim on the $4M meant GPL’s days were numbered. No Liquidation or RE negotiation with Macquarie and no further evidence of restructure alternatives was submitted.

The sun set on evidence authorities that grower rights were paramount in MIS liquidation.

The Receivers eyes were firmly fixed on the growers MIS forestry rights, for here lay an opportunity to recover more for themselves, and the disclaiming or dispossession of grower rights and the unique, crafty, pooled joint sale with pre-determined proportions delivered. Grower assets were now bundled with Gunns assets!

With considerable effort, at no point did the Liquidators or Receivers disclose the status of growers lots – no yield or annual increment volumes or any performance figures for their trees. Historical online references and reports were pulled from view by the Receivers, and an external harvester, who shared some figures, was quickly silenced with the immediate termination of some of his contracts with Gunns. The initial URS Forestry valuation requested by the Liquidators and paid for by growers remains confidential. It is not held by the Court or referenced in the ABL online records.

Thousands of growers not party to the Proceeding were intentionally placed in a position where they could not knowledgably challenge the Liquidator and Receiver cabal.

3.2 Revision of the socialisation of Gunns losses.

From the top down, however, over 13 Million Green Metric Tonnes (GMT) on 100,000 ha were for sale in the joint sale. On weighted averages the MIS trees were a little older than Gunns own plantation trees. At current, weaker prices of ~$30/GMT for woodchip at stump, the 50,000 ha of MIS trees had an estimated fibre value of $180M – ignoring the growth increment being added each year.

Arguably, had the growers’ entitlement been respected with no fault, its value should have held irrespective of the sale price of the whole estate, and growers shared in any sale achieved above valuation.

Collectively Gunns Directors, Officers, Auditors and Bankers managed a former ASX 100 company through to insolvency. Not only have their shareholders paid handsomely as would be expected, but so have the at-arms-length MIS investors. A revisionist view is worth considering.

If one is fair-minded and:

  • accepts Gunns was trading insolvent and at fault;
  • accepts Gunns should shoulder any firesale discount;
  • accepts Gunns should pay the cost of liquidation of MIS scheme trees;
  • knows Growers were contingent creditors not debtors;
  • accepts an alternate approach was feasible;
  • rejects that an unbuilt, unsold PMO should receive any sale share;
  • suspects no PMO sale share is forthcoming;

… then in the pooled sale growers have subsidised the Receivers by $140M ($180M – $40M) in foregone value of their trees, and in the allocation to the PMO assets by a proportionate share of $50M or $36M ($50M x 180/(300-50)), and in liquidation of their own assets by $20M.

At no fault, MIS growers may have subsidised Gunns bankers by $196M. The ANZ consortium has socialised its private loss and recovered the same from grower investors, who were not Gunns Ltd shareholders and had no debts themselves. Six thousand investors had no relationship with ANZ Capel Court but have lost $32,666 each to them from their personal assets – facilitated by Liquidators and Receivers, and overseen by the Court.

ASIC, Senate References and the Financial Services Royal Commission have my complaints and submissions. Insolvency practice driven at the behest of the banks needs to curbed. An extended FSRC 2 is warranted.

Trevor Burdon is a Business and IT Consultant, who most recently was decommissioning Telstra’s Silver Lining cloud. Resident in Melbourne he expects to return to Tasmania when he can see a clearer sky over a better government. Uniquely, as an individual he is a party in the Liquidation of Gunns Plantations, Supreme Court of Victoria SCI 2013 2095. He is appalled at the justice meted out there.

EARLIER on Tasmanian Times …

Insolvency, a predatory practice – GPL Liquidation (Part 2) – $13k stolen from each of 6,000 investors

Insolvency, a predatory practice – GPL Liquidation (Part 1)

STT ~ GPL Settlement – A self-imposed cone of silence …

STT ~ GPL Settlement: silence is inexcusable

Re: STT – GPL Settlement: No Board Response …

A fact’s a fact . . . now give it back!

Invest in Tasmania – Bah!

A Sham …

We serfs, indeed, have a new feudal landlord …

The Heart of Gunns’ collapse (2)

The heart of Gunns’ collapse (1)

What is missing … is any determination of fault

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]
8 Comments

8 Comments

  1. Trevor Burdon

    February 3, 2019 at 4:34 pm

    MJF … The legitimacy of Forestry Rights and grower title has not been in question. This article is about plantations on Gunns land, not those on State lands. See intro to each part.

    I can assure you there are many captains of industry, Tasmanian and interstate, who dare not speak up as I am doing. In fact I have a couple in my phone. They hesitate for fear of embarrassment, sometimes personal and sometimes professional. And loyalty, misguided, too.

    I can’t work out if you want to shame victims, or if you are making a confession.

    Off topic for this article, but are you implying that Forestry Tasmania was considering a challenge on the basis of title or ownership of rights? If so would you please contact me directly.

    • MJF

      February 4, 2019 at 9:54 am

      At the end of the day Trevor, I’m curious to know how you could prove that your financial interest, ie, woodlots, would stand up in a court of law.

      For example, would the landlord have known who owned what trees and where, other than just being aware of a numbered GPL scheme applying to a defined area of State Forest, the rent payment for which just stopped ?

      • Trevor Burdon

        February 4, 2019 at 12:50 pm

        MJF … Our interests have already been put before a court of law and acknowledged.

        By scheme GPL sub-leases of the Gunns lease were registered with the Land Titles Office. I have one exemplar open before me for Woodlot Project 2000 lodged in the Proceeding SCI 2013 2095. It cites D99221134 and D99221136 and volumes and portfolios for each with seals and the Recorder of Titles Stamp 1 Oct 2001.

        From what I understand you are in a position where you can verify details yourself, but if not you should have picked up that I am reflecting on the outcomes of a five-year exercise, not whether growers had any legal entitlement missed by the Court and discovered by MJF.

        Your provocative, simplistic assertions are tiresome and could be seen as trolling. I cite the references here for the benefit of TT Comments readers who do not have the forestry background that you do.

  2. William Boeder

    February 2, 2019 at 9:32 pm

    How is it MJF, that you forever speak on behalf of this state’s logging baddies who infest it?

  3. Simon Warriner

    February 2, 2019 at 12:40 pm

    Call it what it really is.

    Theft.

  4. Trevor Burdon

    February 2, 2019 at 10:49 am

    Thanks, William.

    It’s incredible that I had a valuable asset, no relationship to the bank, and I get fleeced.

    I am approaching Wacka Williams and Peter W-W to push for an FSRC 2, although pollies, litigation funders .. and I suspect even Commissioners, hesitate to question the deliberations of the Supreme Court.

    Beyond regulatory capture there is this judicial capture.

    • MjF

      February 2, 2019 at 12:05 pm

      Hardly incredible Trevor, when you consider that there was no title involved, no title encumbrances to flag any third party interest, and only a GPL woodlot map made up to depict some shapes allocated to investors. How accurate were these maps, and would they stand up to legal scrutiny? And where was your registered legal interest as far as FT was concerned?

      All you had to hang your hat on was a lease between two parties and a paid-for connection to one of those parties, neither of which were you. Did a Forestry Right exist, and if so, how .. without a title ?

  5. William Boeder

    February 2, 2019 at 1:48 am

    Well done Trevor, in your provision of fact evidence per your well-regarded surgeon-like precise breakdown of facts.
    Given the finite description of who owned what………(that which was not necessarially Gunns Ltd assets) your summary of what should have been properly identified by the predator personnel (all those that were ultimately performing their work ultimately for Mark Korda of Korda Mentha (he rumoured to have more financially powerful clout than even a Sco Mo) your presented summary demonstrates and correctly claims which assets belonged to who.

    It seems quite clear to me, that a mob of predator professionals have sought, with bold intent, to improperly gain a huge slab of money that belonged to the group of far more ethical others with their money invested in GPL, one must also note that the predator professionals appear guilty of withholding important fact evidence from the Court of Adjudication.

    So this actual fact evidence can now allege 2 charges against the Greedy mob, I would consider that this far better analyzed and notated matter…….surely must entitle yourself along with the number of due others, full recompense of the monies nabbed by PPB on behalf of themselvwes and the furtive financially avaristic others, one must also consider the lost earning capacity of that money not being positioned to reinvest that same slab of money.

    The compensation or recompense awarded must include the appropriate amount of interest that would have accrued, then the costs incurred by the parties seeking their money returned but were to be disadvantaged by the Court (on the behalf and at the behest of the professionally avaristic mob.

    There is also the fact that the failed fidelity of ‘the adjoined pack members that had contributed their connivance’ in this improper solvency undertaking (for they must also serve their time roped to the mast to cop their stripes per the Cat O’ Nine Tails……fiercely struck upon their backs by the burly flagellator.

    Add to that the further recompense sought from the members of the ‘cabal of the avaricious’ for the extreme duress and wholly unwarranted distress wrought upon yourselves being ‘the Court disadvantaged’ in having been mired in the maze of missing fact evidence (improperly withheld from the Court) while having to undergo their huge monetary loss of that which was never legitimately up for grabs by the collective of vulturine professionals.

    One has to wonder why this MIS investment money was not protected by the prudential laws [APRA] and the ASX of this country, as one notes how this allocated investment money had been rather beguilingly snaffled or MIS-appropriated from the improperly disadvantaged MIS investors.

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