Mayfair 101 founder James Mawhinney pursues tropical dreams after wealth unit wound up

Mayfair 101 founder James Mawhinney has vowed to fight on.

Mayfair 101 founder James Mawhinney has vowed to fight on.

Mayfair 101 founder James Mawhinney has vowed to fight on, saying the collapse of the IPO Wealth fund will allow him to devote more attention to his other investments, including an island off Venice and far north Queensland, where he is planning a $2bn tourism extravaganza.

“The outcome of the IPO Wealth matter now means that chapter is closed and we can now focus all our energy and attention on other investments, including Mission Beach and Dunk Island,” Mr Mawhinney told The Weekend Australian in an exclusive interview on Friday.

“We are continuing on with our plans for the rest of the Mayfair Group. It is unfortunate what has happened.”

Earlier this week a court ordered Mayfair 101 unit IPO Wealth Holdings to be wound up.

The order was made by Justice Ross Robson in the Supreme Court of Victoria after hearings in which the corporate regulator intervened. The court heard allegations that the fund operated like Ponzi scheme, with money from new investors used to pay those exiting.

Mr Mawhinney said IPO Wealth was worth $120m on March 1 but its value had been severely eroded since receivers and managers took over. The unit had invested in diverse assets, including India’s largest business-to-business payment company, as well as several IPOs, an Australian business creditor company and a couple of debt facilities.

“Since receivers and managers were appointed back in May there has been a huge amount of erosion of money, which is devastating for the unitholders. We have fought tooth and nail to keep it alive, but its structure has collapsed, which has left unitholders in a very dire position,” Mr Mawhinney said from his Melbourne home.

Meanwhile, the entrepreneur said he was working closely on the 107 residential properties Mayfair 101 has contracted to buy in Mission Beach, just south of Cairns, as well as his $30m acquisition of Dunk Island, just offshore.

“We are working closely with the provisional liquidators Grant Thornton and receivers McGrath Nicol to complete the refinancing arrangements so the project can continue,” Mr Mawhinney claimed.

Dunk Island’s vendor, Adam Bond, said the island was being prepared to return to the market.

“Effectively our position remains unchanged by the most recent developments,” said Mr Bond, managing director of Family Islands Operations for the Bond Group, in a statement to The Weekend Australian on Friday.

Mr Bond said he had engaged an agent and was in the process of preparing material for a public sales campaign.

“Obviously, from here on we would be happy to consider any serious offers put forward,” he said, but refused to provide a minimum purchase price.

“(However) if Mayfair 101 are in a position to complete in the near term that would be a good outcome.

“However, in light of recent appointments we have to be considering all options available to us as mortgagee in possession, including seeking expressions of interest from the market,” Mr Bond said.

Mr Bond said he had been in possession of the asset since July 15.

Meanwhile, nervous Mission Beach real estate agents yesterday claimed they were concerned the deposits held in a trust fund for the 107 residential properties Mayfair 101 had contracted to buy over the past year could be pocketed by the receivers.

Holding a lot of deposits

“All of us agents are holding a lot of deposits from Mayfair,” said Steve Wiltshire of Mission Beach Real Estate, who has contracted to sell 25 properties to Mayfair 101.

“This money should go to the vendor. I am told the receivers can claw it back.”

Mr Wiltshire has sold properties ranging from just under $1m to around $8m to Mayfair. He is pleased that, should Mayfair not complete, he has found buyers for at least two of the properties, priced at $600,000 and $1.2m.

“In a few cases some (other) vendors (also) have buyers waiting to purchase the properties,” Mr Wiltshire says.

It is understood Mayfair 101 has paid deposits ranging from 1 per cent to 10 per cent on the contracted properties, and has paid far too much for some assets according to local sources, speaking on condition of anonymity.

Financial experts said yesterday it would be impossible for the receivers to take the deposits because the money was held in the real estate agents’ trust funds.

There were a range of possible outcomes, including the contracts ending and deposits being repaid to Mayfair, one source said.

There is hope for the tiny tourist hamlet where it is not uncommon for residential real estate to languish on the market for up to two years before being shifted.

“Good or bad, Mayfair 101 put us on the map. People had never heard of Mission Beach until all of this happened,” Mr Wiltshire said.