Midland Hwy Pty Ltd was the developer behind the Hermitage Bendigo land banking scheme in Victoria and was placed into administration on 2 July 2015.
The appointed administrators recommended that Midland Hwy Pty Ltd be put into liquidation, but the company’s creditors voted to enter into a deed of company arrangement (DOCA).
Under the DOCA, Bilkurra Investments Pty Ltd, the owners of the land at the centre of the scheme, were to take over that development, but ASIC has appealed to the Federal Court to have that agreement put aside.
In a statement, the regulator claimed that winding up Midland Hwy Pty Ltd would allow for a full investigation into the failed venture.
“ASIC considers that it is in the public interest for Midland Hwy to be wound up so that a proper investigation into the affairs of Midland Hwy can be conducted by independent liquidators,” the statement said.
ASIC’s decision to launch court proceedings was also spurred on by matters reported to it by the former administrators of Midland Hwy Pty Ltd.
According to the administrators, Midland Hwy Pty Ltd had raised $24 million from investors, but only $1.7 million of that had been put towards the Hermitage Bendigo project and it is unlikely the company has the funds to pay the $24 million back to option holders and is likely to have been insolvent from March 2012 and potentially as early as 7 September 2011.
The administrators also told ASIC that $22.3 million of payments are likely to be subject to other claims which should be investigated by liquidators to see if they can be recovered, including substantial amounts paid to companies associated with Bilkurra Investments Pty Ltd for which there is no proper documentation.
There are also concerns whether Bilkurra Investments Pty Ltd has the funds required to complete the development.
ASIC said the moves to wind-up Midland Hwy Pty Ltd and investigate its failure was part of the regulator’s wider investigation into land banking schemes, which currently includes action against notorious spruiker Jamie McIntyre.