Mayfair founder insists he has investor support

In the Victorian Supreme Court, Justice Ross Robson said investors were “very, very concerned as they stand to lose a great deal of money”.

Mayfair 101 managing director James Mawhinney

Mayfair 101 founder James Mawhinney claims he has the backing of investors in the $80m IPO Wealth fund for a restructuring, following a court hearing on Thursday that heard concerns about the transfer of funds to companies he controls.

In the Victorian Supreme Court, Justice Ross Robson said investors were “very, very concerned as they stand to lose a great deal of money” following the latest report from provisional liquidator Dye & Co.

Pressure is mounting on the Mayfair 101 empire as the prospects of it getting up a mega-project to turn Dunk Island and Mission Beach into a $1.5bn tourism mecca are receding, with the corporate regulator winning separate interim injunctions against Mr Mawhinney.

That case was in the Federal Court on Wednesday, and the Australian Securities & Investments Commission said it was still investigating after Grant Thornton was last month appointed as provisional liquidators to M101 Nominees Pty Ltd, which had funded the tourism play.

The $80m IPO fund bought interests in tech companies destined for future listings. But when it halted redemptions in April, fund trustee Vasco Trustees called in receivers Dye & Co in late May.

In court on Thursday, the fund’s trustee and the corporate regulator raised issues about Mr Mawhinney promoting a plan to transfer assets into a new vehicle.

Vasco’s barrister, Jonathan Evans QC, told the court there were concerns that Mr Mawhinney was also using misusing information to contact investors.

But the founder argued that contact details could be used and there was largely “two-way communication”.

The court heard ASIC was concerned that IPO trust assets would remain in jeopardy as Mr Mawhinney was seeking to convince enough unit holders to replace Vasco as trustee and to transfer trust assets to a new company. This would also involve shifting nearly $3m held as a capital protection reserve.

Justice Robson said more than half the trust funds had been lent to companies associated with Mr Mawhinney. He noted the “flagrant breach of trust” and queried why trustee Vasco did not know about it or prevent it.

Justice Robson said if there was “any real risk” of Vasco being replaced, he would immediately hear an application to appoint a receiver to the trust.

Mr Mawhinney, representing himself, said votes on six proposed resolutions about the trust’s future had been taken independently, and he claimed ASIC may be “overreaching” if it considered it knew better than the 181 unit holders.

A Mayfair 101 spokesman said more than 95 per cent of unit holders that voted on the proposed resolutions supported the proposal to replace the trustee.