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ASIC court action against Westpoint

The Australian Securities and Investments Commission has commenced legal proceedings in relation to a number of companies within the Westpoint Group, as part of an investigation into the affairs of the companies. ASIC filed an application in the Federal Court in Perth seeking the winding up of York Street Mezzanine Pty Ltd and the appointment of a provisional liquidator to the company. York Street is a company within the Westpoint Group which has raised so-called ‘mezzanine finance’ for a property development at 2 York Street in Sydney by issuing promissory notes to the general public. ASIC contends that the project is suffering from a significant shortfall of assets over liabilities so that some 900 investors are at serious risk of not receiving repayment of their investments, currently estimated to total over $75 million. ASIC is currently investigating the affairs of the Westpoint Group, and has sought the appointment of a provisional liquidator to help protect the assets of York Street. ASIC has also applied for declarations, injunctions and disclosure orders regarding alleged misleading and deceptive conduct by York Street in its communications to investors who hold promissory notes. The Court has also been asked to consider an application for declarations and injunctions against Westpoint Management Ltd on the basis that it was knowingly concerned in, or a party to, York Street’s alleged misleading and deceptive conduct. ASIC will be asking for interim orders to preserve the assets of the company. These matters will be heard on November 24. Other court action commenced by ASIC includes an application filed on November 18 2005 for orders seeking the lodgement of annual financial statements by a number of companies within the Westpoint Group namely, Emu Brewery Mezzanine Ltd, North Sydney Finance Ltd, Market Street Mezzanine Ltd, Chocolate Factory (Winthrop) Ltd and Paragon Apartments Ltd. ASIC is also seeking orders for the lodgement of annual financial statements by three managed investment schemes operated by Westpoint Management Ltd being Warnbro Fair Syndicate, Paragon Commercial Syndicate and Westpoint Income Fund. ASIC’s action follows the failure by the respective companies and schemes to lodge accounts for the financial year ended June 30 2005, which were due by September 30 2005. ASIC has applied to the Court for orders after the Westpoint Group failed to comply with ASIC notices to lodge the accounts of the companies and schemes by November 14. ASIC is concerned to ensure that the Westpoint Group complies with its legal obligations to provide investors and creditors with proper financial information about the companies and schemes operated by the group, in a timely manner. The matter relating to the lodgement of accounts will be heard on December 14.

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