Elderslie Finance Corporation is facing a court battle with trustee giant Perpetual, which wants to stop Elderslie accepting money from the public or paying investors. The company’s website claims that the chairman of the group, which manages more that $200 million of investor funds, is former Liberal lader John Hewson.
Court documents obtained by SmartCompany reveal Perpetual has launched legal action, seeking orders that would restrain Elderslie until 30 June 2008 from:
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- Paying any money to the investors that hold its debentures – a form of fixed-interest note generally provided in return for a medium or long-term investment.
- Accepting any further deposits or loans from members of the public.
- Issuing any further debentures.
- Using its, or its subsidiaries’, assets as security for loans or other purposes.
The claims also leaves open the possibility that the court could be asked to appoint a receiver to Elderslie in order to enforce a charge Perpetual holds in relation to the company under a trust deed agreed in 1992 between the parties.
According to early court documents, Perpetual will initially rely on affidavit evidence from Christopher Green, its debt markets general manager, and another individual, Greg Hall.
The first substantial hearing in the matter is to take place in the Federal Court in New South Wales tomorrow morning before Justice Lindgren.
Elderslie, which was established almost 50 years ago, describes itself as a structured finance and investment management group. The investment management side of the group offers debentures and unsecured notes to retail investors.
In April, Hewson attacked the Australian Securities and Investments Commission after it revealed Elderslie had not met benchmarks set down by the corporate regulator as part of its crackdown on the $8 billion debenture industry.
Hewson told The Australian at the time that he believed Elderslie had been unfairly “thrown in the box” with failed companies such as Fincorp and Westpoint. “We found it very difficult to see why some of these benchmarks should be expected to apply to us, and I’m sure others would say the same thing,” he said.
“There’s a lot of political pressure on ASIC to look like they are doing something, but often the people behind regulators don’t have the necessary skills to implement these things properly,” Hewson said.
“ASIC has decided to clamp down and there can be a lot of collateral damage in the industry when they don’t fully understand what they are doing.”
Elderslie had $483.5 million in assets at the end of 2006-07 financial year, up 11% on the year before, and declared an after-tax profit for the year of $1,558,000.
The company also increased the number of secured debentures and unsecured notes it issued in 2006-07, with total issues amounting to $132 million.
The company said it would be issuing an official statement until after tomorrow’s court proceedings.