As ASIC prepares to seek the closure of Westpoint Corporation in the Federal Court this month, the besieged developer’s fate seems all but sealed, as receivers move in on the company’s major assets, including its corporate headquarters and the Emu Brewery
As ASIC prepares to seek the closure of Westpoint Corporation in the Federal Court this month, the besieged developer’s fate seems all but sealed, as receivers move in on the company’s major assets, including its corporate headquarters and the Emu Brewery development site.
The Emu Brewery’s receivers, Korda Mentha, has said it would be putting the development site on the market; however the slightly superstitious developer might want to clutch their four-leaved clovers and rabbit’s feet extra tight if considering purchasing.
Previous owners with grand plans for the site include the infamous Bond Corporation and insurance group FAI – both the victims of major corporate collapses with directors serving jail time, losing billions along the way.
And while Westpoint’s future will be determined in the Federal Court on February 10, things are looking ominous, with Westpoint’s executive general manager David Jones confirming to WA Business News that roughly half of the company’s 350 staff had been retrenched.
“When the administrators were appointed, the business could not go on at the same size, and we are downsizing,” Mr Jones said.
Mr Jones acknowledged that the era of Westpoint Corporation looked to be over but said the company’s key businesses in terms of property sales, financial planning, brokering and money management services were still going strong.
Those businesses do not fall under the Westpoint Corporation umbrella, which mainly deals with the construction and development side of things where things look dire for the company, with almost $1 billion worth of projects under way.
The finger pointing has also begun as part of the inevitable fallout of the collapse, with Westpoint blaming financial planners for placing clients in Westpoint’s mezzanine investments (and enjoying high commissions as a result), while planners and advisers have begun to lay the blame at the group’s directors and auditor KPMG for misrepresenting the company’s financial health.
Last week the Association of Independently Owned Financial Planners announced it had set up a fund for out-of-pocket Westpoint investors “to restore investor confidence in the ailing property group and recoup funds some clients may have lost”.
Up to 4,000 investors who have invested more than $300 million in promissory notes – an unsecured, but high return investment, must now wait as secured creditors seize assets in an attempt to recover cash.
After going for several Westpoint mezzanine finance companies, ASIC late last year sought the winding up of Westpoint Corporation on grounds of insolvency.
Westpoint Corporation is one of the guarantors for loans advanced by various mezzanine companies to developer companies for the property development projects undertaken by the Westpoint Group, seven of which are under administration.
And it’s not just mezzanine finance investors that are at risk of losing their money, with receivers appointed to Westpoint-managed property syndicates last week, including Paragon Commercial Syndicate (which holds apartments, the company’s corporate headquarters and Paragon arcade), as well as Warnbro Fair Shopping Centre.
Circling the remains of Westpoint, litigation funder IMF Australia has confirmed it is approaching investors and is investigating a class action lawsuit against financial planners, as are class action lawyers Slater & Gordon.
