Dixon Advisory enters liquidation after paying thousands of creditors
One of Australia’s largest self-managed super fund providers is in liquidation after multiple class actions and a dramatic $310m collapse that prompted millions to be paid out to dudded clients.
One of Australia’s largest self-managed superannuation fund providers, which collapsed with estimated debts of $310m, will be wound up after paying $23.5m to thousands of creditors.
Dixon Advisory & Superannuation Services had been fined more than $7 million and faced two class actions, after being accused of offering advice that wasn’t appropriate for its clients.
The company, which used to be one of Australia’s largest self-managed superannuation fund (SMSF) providers, went into voluntary liquidation on Friday.
Dixon Advisory has been in administration since 2022 and had a deed of company arrangement (DOCA), which promised parent companies E&P Operations and E&P Financial Group would contribute to a deed fund to repay creditors.
Minutes from a meeting with creditors and liquidators in October showed about 3,500 creditors were paid a first and final dividend of 7.96 cents per dollar owed, equating to a total $23.5m – more than previously expected, but still a fraction of its estimated $310.7m in debts.
However 31 creditors had not yet received payments of $102,354.27, due to issues including incorrect bank details.
Under the DOCA, Dixon Advisory would move into liquidation once the deed fund was fully paid out.
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The company’s corporate shell will remain for three to five years to deal with ongoing matters with the Compensation Scheme of Last Resort (CSLR) for victims of financial misconduct.
Dixon Advisory will have to remain in liquidation until all CSLR claims are finalised, the October meeting minutes said.
The industry-funded CSLR has paid out 339 claims to former Dixon Advisory clients, totalling $43.5m in compensation, as at September 30.
Liquidator Rebecca Gill from Teneo said the liquidation is expected to finish after June 2028.
Dixon Advisory was once Australia’s fourth largest SMSF provider and in 2000, had grown to 350 employees.
By 2015, it had 4,500 SMSFs under management, valued at about $5bn, with around 8,000 SMSF members.
The Australian Securities and Investments Commission (ASIC) suspended the company’s Australian Financial Services Licence in 2022, months after the company went into voluntary administration.
The company was slapped with a $7.2 million fine in 2022 after the Federal Court found six of its representatives had failed to act in their clients’ best interests and to provide appropriate advice for their circumstances.
The court found on 53 occasions, Dixon’s representatives did not act in clients’ best interests when they recommended they invest in in-house products, including the ASX-listed US Masters Residential Property fund (URF).
About 4,606 investors had lost $367.9m from investing in the URF Equities product listed on the ASX, as it fell significantly below benchmarks, a 2022 administrators’ report said.
On average, each former client had claimed a debt of $79,880.
The investors’ losses formed the majority of the company’s debts, which were estimated to be around $368.5m in 2022, the report from administrators Stephen Longley and Craig Crosbie of PwC said.
A newer report lodged with ASIC earlier this year said the company’s estimated debts totalled $310.7m.
About 2,773 complaints were made to the Australian Financial Complaints Authority (AFCA) against Dixon Advisory as at 30 June last year.
Two class actions were also lodged over clients who were told to invest in the URF and related products. One of the class actions had a $16m settlement approved last year in the Federal Court.
The company also reported losses before tax of $1.1m in the 2021 financial year and $5.8m in the 2022 financial year, as its client total fell and it grappled with legal proceedings and AFCA complaints.
ASIC had also filed legal proceedings against Dixon Advisory director Paul Ryan in 2023, alleging he breached his director’s duties by entering into a deed of acknowledgment of debt (DOAD) with the firm’s parent company, E&P Operations, when the company was approaching insolvency.
The DOAD stated E&P Operations would only need to repay a $19m debt to Dixon Advisory, if the legal claims against it resulted in penalties which weren’t covered by insurance.
ASIC had claimed the DOAD prevented the firm from repaying creditors.
The proceedings were dismissed in the Federal Court last year, with Justice Tom Thawley finding Mr Ryan had reasonably relied on legal advice that the DOAD was appropriate and in the best interests of the company.
The administrators previously wrote the DOAD would be investigated further in a liquidation.
News Corp has contacted E&P Financial Group and Mr Ryan, but they declined to comment.
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Originally published as Dixon Advisory enters liquidation after paying thousands of creditors
