Halifax client funds in limbo while multimillion-dollar case continues
Investors are yet to receive funds two years on from the collapse of a Gold Coast stockbroking firm and their wait is not finishing anytime soon.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
TWO years on from a collapse of stockbroking firm Halifax Investments Services, investors are yet to receive a cent and face a longer wait while the Federal Court sorts out how to dish out the money.
When Halifax went into administration in November 2018 the firm held $211.6 million of client funds. It was run by Gold Coaster Jeff Worboys from Sydney and Southport.
It provided broking and investment services, including international equities, options, futures and forex, and at the time of administration held $211 million in investor funds from 10,000 clients. The accounts were frozen amid investigations into alleged misconduct by the directors.
Despite investor account balances increasing by 25 per to $264.8 million and legal and liquidator fees totalling $14.4 million, creditors have to wait at least another eight months before seeing any of it.
Last year, liquidators Morgan Kelly, Phil Quinlan and Stewart McCallum, of KPMG for Halifax Investments Services and Halifax NZ, started legal proceedings in the Federal Court of Australia and High Court of New Zealand seeking orders on how the money should be distributed.
A joint hearing of both courts was due to start on November 30 for two weeks.
One investor, who represented 168 other Halifax clients, said investors were facing financial ruin because of the long wait: “I have a client -- a self-funded retiree -- who took his out superannuation, paid off his house and bought himself a Landrover 4WD and caravan,” he said.
“He bought $2.5 million worth of shares with his remaining funds through the Halifax platforms and the dividends were going to be what he lived on.
“His funds got frozen in the liquidation and he has just a few thousand to live on. He might have to sell his house just to make ends meet.”
The investor said he believed the fund had been in profit since the entities were put into liquidation.
MORE BUSINESS NEWS
Coast property price rises ‘tip of the iceberg’
Sanctuary Cove buyers smash record books
REVEALED: Daniel Ridgeway to open new Coast restaurant
“I understand they (the liquidators) have to do their due diligence to confirm where the money has gone but every conversation I have with them we are told to wait another six months,” he said.
“We are now close to entering the third year of the funds being frozen.”
In an August report to creditors, liquidators said investors would not get the full amount of what they were owed because of a $33.2 million “deficiency in client monies”.
That was attributed to the difference between the investor account balances of $264.8 million as of July 31 this year and the $231.6 million value of those assets.
The liquidators said it would take “at least six months” for a distribution to be made to creditors following final court orders and directions.
They estimated there would not be a return to creditors prior to June 2021.
The liquidators said the court case was necessary for two reasons.
The first was Halifax investors held competing interests and arguments over the disbursement of funds for which it was necessary to seek directions from the court.
In addition, liquidators said there had been “commingling” of client funds across the Australian and NZ entities and it was not feasible to trace funds back to individual accounts.
“It is necessary for the liquidators to seek directions and/or judicial advice as to how to proceed and to enable a distribution to investors as promptly as possible,” the liquidator report says.
Mr Kelly declined to comment on the length of the liquidation process.
After Halifax went into administration it was revealed that an associated company called Australian Mutual Holdings had been drawn into examination of ”Australia’s biggest Ponzi scheme” Courtenay House Trading, which collapsed in 2017 owing $209 million.
$45 billion: Inside Coast’s miracle economic turnaround
The Gold Coast has Australia’s fastest-growing economy, with a new report revealing the city’s fiscal output is now worth an astonishing $45bn. FIND OUT HOW
The best ETFs of the past five years
Exchange traded funds, which let investors buy into entire sectors or markets with just one transaction, are going from strength to strength. But some ETFs are stronger than others.