‘Substantial shortfall’: Just $1.6 million recovered from $446 million owed to First Guardian investors
Thousands of Australians who lost hundreds of millions in retirement savings in superannuation fund First Guardian have received a grim update.
Thousands of Australians who lost their retirement savings in the collapse of superannuation fund First Guardian are unlikely to get hundreds of millions of dollars owed back in full, liquidators have warned.
First Guardian Master Trust collapsed earlier this year, taking with it $446 million from around 6000 mum-and-dad investors.
In an update on Tuesday, FTI Consulting liquidators Ross Blakeley and Paul Harlond revealed just $1.6 million had been recovered to date.
That included $336,646 from the sale of a $548,000 2023 Lamborghini Urus — one of a number of lavish goods allegedly purchased by the directors in a shopping spree before the fund’s collapse.
Another $450,000 was returned from the liquidation of craft brewer Fox Friday Brewing, while the bulk of the $1.6 million came from the recovery of $859,227 from Kanun Capital Pty Ltd as Trustee for the Kanun Capital Unit Trust, a niche lender to property developers.
The outstanding book value of that investment, however, stands at more than $30 million.
The federal court appointed FTI Consulting in April as liquidator of Falcon Capital, the responsible entity that administered the First Guardian scheme.
The $1.6 million so far recovered will not even be enough to cover the liquidator’s remuneration, which currently stand at nearly $2 million.
FTI Consulting said it expected to recover enough money to repay First Guardian’s lenders, with claims totalling $243,391 from secured and unsecured creditors received.
Those debts, plus any liquidator remuneration fees, must be paid before First Guardian investors can receive a cent.
“Indeed, a substantial shortfall of asset recoveries to outstanding and unredeemed funds is likely,” they wrote.
The liquidators also warned that they will not be in a position to repay any money until at least 2027.
“Any potential distribution to creditors and unitholders is not expected to occur for at least 18 months, as sufficient funds and certainty are required in the liquidation process before any distributions can be considered,” they wrote.
“The liquidators consider that reasonable prospects of a surplus also exist in the liquidation to enable a distribution to unitholders, although it is not possible (including given legal and commercial sensitivities) to provide and estimate or range of what the quantum of any such surplus may be at this time.
“The liquidators do however temper unitholders’ expectations and consider that only a partial return of unredeemed funds may eventuate.
“In particular, the liquidators note the minimal recoveries effected to date, the nature of certain investments (being illiquid, intangible or in foreign jurisdictions), their contractual terms, and disputes that existed prior to the appointment of the liquidators, thus considerable commercial and legal considerations and challenges exist in effecting recoveries.”
FTI Consulting said a number of First Guardian investments would require litigation to effect recoveries, while “other potential legal claims identified would primarily be against the directors or related parties, noting the ability of the directors or related parties to meet any claim and repay monies is uncertain”.
Any court action would take considerable time and money.
“The liquidators note that conducting investigations, litigation and effecting recoveries requires funding, and the liquidators are currently having to manage their actions, including use and engagement of advisers, within the constraints of the current financial position of the liquidation,” they wrote.
First Guardian was founded in 2019 as a managed investment scheme.
Investors were advised to roll their money into a retail choice super fund, then invest their funds into First Guardian, which was available to investors on the superannuation platforms Equity Trustees, Netwealth and Diversa.
Customers said they were unaware their funds were being transferred to First Guardian Master Fund despite the details being written in the company’s legal documents.
The corporate watchdog is currently conducting multiple investigations into conduct connected to First Guardian.
The Australian Securities and Investments Commission (ASIC) took court action earlier this year to preserve any remaining assets of Falcon Capital and First Guardian “to the extent they are available, so they can be recovered for investors”.
“We are also actively exploring avenues for compensation for victims,” ASIC says on its website.
“Around 6000 people invested their money, including their superannuation retirement savings, into First Guardian. In many cases, this happened after people were contacted by lead generators and referred to financial advisers.
“These advisers often told investors to roll over their existing superannuation balances into a choice superannuation fund available on a platform or to set up a self-managed super fund (SMSF) to facilitate investment into First Guardian.”
Two years before First Guardian’s collapse, Victorian resident Lisa made the decision to move her savings into a different fund.
With a few years left working as a registered nurse in San Remo, the 63-year-old was hoping to find a fund that would bolster the growth of her savings ahead of her retirement.
“I was told my super would grow much faster by this ‘lead’,” she told NewsWire in July.
They instructed her to make an upfront payment of $4000 for her super to rollover, and was allocated a financial adviser from Financial Services Group Australia, who “was the one to work out what how to invest my superannuation according to the growth I wanted”.
Then in April 2024, she got a call from her adviser, who told her “something happened with one of the companies”.
She then learned $40,000 of her money had been invested into Shield Master Fund, which was subsequently frozen.
It was then her financial adviser said “he didn’t know if I would get any [money] back”.
After successfully getting in touch with her adviser after he “no longer [returned] my emails”, she discovered $20,000 of her savings had been transferred to First Guardian Master Fund.
“I had no idea I had any money invested in [First Guardian],” she said.
“I had seen media coverage of this company’s liquidation. When I said this to the adviser, he had no response.”
Half of Lisa’s retirement savings had allegedly been invested in two managed funds which had since collapsed, and she had nowhere to go.
“I have not been offered any kind of compensation or, in fact, heard from anyone involved in the set up of my super portfolio,” she said.
“I have now lost $60,000 – half my superannuation.”
ASIC has already taken action in relation to the similarly failed Shield Master Fund, which collapsed in June 2024 and “involves some of the same persons and companies”.
The watchdog, ASIC, is also investigating First Guardian’s former managing director, David Anderson, who allegedly funnelled funds from superannuation members into his failed property developments and craft breweries.
It’s alleged Mr Anderson also poured the investor’s savings into celebrity chef Scott Pickett’s restaurant empire, of which he was an investor, the ABC reported.
Mr Anderson’s assets were frozen in February and his passport seized as liquidators and investigators began poring through financial records.
FTI Consulting said it had prepared a list of more than 150 subpoenas for bank statements of third parties where Falcon monies were believed to have been paid, directly or indirectly.
Liquidators are also investigating “entities and funds established by the directors and their associates in the Cayman Islands, including understanding their purpose, activity and financial position”.
— with NewsWire
Originally published as ‘Substantial shortfall’: Just $1.6 million recovered from $446 million owed to First Guardian investors
