Grower investors across Australia have lost much if not all of their investments in the failed Managed Investment Schemes (MIS). They have primarily failed due to cash flow reasons and moved inevitably from administration to receivership and liquidation.
Those with viable harvests have been most attractive to the insolvency kleptocracy, as the disclaiming of grower assets can lead to firesales to third parties, extortionate insolvency fees and the socialisation of parent company losses across thousands of individual grower investors.
Growers money that underpinned the establishment of significant primary industry businesses have not been fairly rewarded for their initial investments. Insolvency can proceed without any determination of fault, and where court action is underway against directors and auditors, it is drawn out interminably to well after the loss has been borne by growers who were never at fault.
This author has regretfully watched the developments in following MIS:
- AGW Walnuts – MIS schemes were originally administered by Gunns Plantations as Responsible Entity (RE), and then by AGW Funds Management, a subsidiary of Webster Ltd. Growers were held to an onerous contract, while Webster bought the full annual harvest at a price seemingly discounted to that available in the open market. Independent pricing reviews were never made available for verification by growers. In May 2019 growers, under financial and governance duress voted to terminate the schemes, and 15 years of harvest rights were transferred to Webster.
- Gunns Plantations Forestry – growers assets were pooled with Gunns Ltd assets and sold with them. The final distribution was well below market valuation and growers subsidised the liability of the parent. The companies were not cross-collateralised. Unsold asset category(s) received large portions of the sale, state actors leasing crown land prevented sales and contested grower returns, and the court proceeding is yet to move from directions hearings to action against those accountable for the collapse of the parent.
- Quintis/TFS Sandalwood – Early schemes moved into Administration and Receivership in 2018 and a Grower Co-operative is fighting to establish a new RE. The Board and Executive, which are comprised of some of the same individuals failed to report to the market that their key customers had not renewed their purchase agreements.
The Courts are ineffectual in achieving fair and equitable outcomes. Receivers and Liquidators operate under a licence from the Court, and hold the whip hand. The Court defers to them on business agreements reached, and provides orders to formally conclude proceedings. These orders are often made after the insolvency actions have all but completed.
The adversarial nature of proceedings (as opposed to a fairer investigative approach), demands that growers face inordinately high court costs to challenge Receiver and/or Liquidator actions.