The IPO Wealth Holdings group was a division of Mayfair 101 which borrowed from the IPO Wealth Fund to finance private equity investments. | Media.com

Vasco IPO Wealth Fund - Trust Deed.pdf

Mayfair 101

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Company

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IPO Wealth Fund documents

Vasco IPO Wealth Fund - Trust Deed - Execution Version 16.03.2017 (2).pdf

IPO Wealth Fund documents (1)

Information Memorandum - IPO Wealth Fund (1 March 2019).pdf

IPO Wealth Fund documents (2)

Settlement Deed - IPO Wealth Holdings Group.pdf

Settlement

Mayfair 101 Managing Director James Mawhinney has called for a Parliamentary inquiry into the Australian Securities and Investment Commission's handling of Mayfair 101 in the wake of a legal settlement between liquidators appointed to the IPO Wealth Holdings group, Mayfair 101 and Mr Mawhinney.In

Major Victory for Mayfair, James Mawhinney & Lenders - IPO Wealth Liquidators Abandon Claims, Relinquish 80 per cent of Assets

IPO Wealth

Release

Looking forward to seeing the settlement announcement in Saturday's Australian Financial Review

Post

Mayfair 101 has transferred an asset that belongs to its investors to a British Virgin Islands company controlled by the group’s founder, James Mawhinney, a court has heard.

A simple reading of the offer document makes it clear that this claim was misconceived.

Supreme court told that shares owned by investors were moved to a BVI firm controlled by Mayfair founder James Mawhinney

The Guardian

Mayfair 101 transfers investors' asset to British Virgin Islands, court hears

Response

This shows how ASIC relies on misinformed journalists from the Australian Financial Review to undertake regulatory activities. It's a case of the blind leading the blind...triggering hundreds of millions of dollars of damage. 

Why did ASIC not ring Mr Mawhinney? Why did they not visit Mayfair's offices 200 metres up the road? Why did ASIC not write to Mayfair 101?

one responsible entity withdrew misleading promotional materials on their website and subsequently wound up its fund.

ASIC should be asked to disclose which fund this was. If it is the IPO Wealth Fund, then it proves the winding up of the IPO Wealth Holdings group was not for the reasons set out in the trustees court application but because of ASIC. Mayfair 101 encourages investigative journalists to find this out. We are happy to proven wrong of course however if true, this would be catastrophic for ASIC and the trustee who alleged the IPO group ought to be wound up for reasons other than the 'true to label' campaign (which was never part of their application).

Asic.gov

  ASIC

ASIC tells fund managers to be ‘true to label’

This is the first affidavit of Craig Dunstan, Managing Director of Vasco Trustees.

Why did he tell the court they were "Fund assets" when they were not, and why did he not tell the court about the corresponding change in liabilities which showed the assets had been paid for?

Mr Dunstan is meant to a chartered accountant. He has significant duties to the fund's unitholders to protect their investment...including not making false or misleading statements in court filings.

Michael Galvin KC acting for the IPO Wealth liquidators told Justice Robson that Mr Mawhinney had transferred investor monies to the British Virgin Islands.

This statement was relied upon by ASIC to appoint liquidators to M101 Nominees Pty Ltd, ban Mr Mawhinney from travelling outside Australia, and impose injunctions from dealing in financial products.

...and yet no such transfers ever took place. ASIC nor the liquidators have never filed evidence to support their claims because none exists!

These are the wishes of IPO Wealth's unitholders which were over-ridden by ASIC. 95.6% wanted Vasco replaced, the provisional liquidation ended and Mayfair 101 back in control of the assets.

After ASIC had successfully swept these aside, Vasco obtained a silencing order stopping Mr Mawhinney from communicating with the unitholders. 

Who were they both trying to protect?

ASIC keeps identity of cash fund marketers secret

If one of those secret funds was the IPO Wealth Fund, it would mean that ASIC and Vasco potentially conspired to collapse the fund to the detriment of 181 Australians. This would be an interesting fact for an investigative journalist to find out.

Ten fund managers wrist-slapped for labelling their products in a misleading way told ASIC that disclosing their identity could harm the relationship.

Australian Financial Review

<h3>Introduction</h3>The IPO Wealth Holdings group (IPO Group) was a division of the Mayfair 101 group which comprised 17 special-purpose investment companies. James Mawhinney was the director of the companies.&nbsp;Since 2017 the parent company of the IPO Group, IPO Wealth Holdings Pty Ltd (Borrower), borrowed money from the IPO Wealth Fund pursuant to a facility agreement. &nbsp;<figure class="image"><img src="https://stage-sources.media.com/images/6452/9d170477-7be6-4840-9149-5ff1807b5535.webp"></figure>&nbsp;The fund’s offer document specified that the fund could only make loans. &nbsp;The offer document precluded the fund from owning shares.&nbsp;The fund’s offer document was prepared and issued by the fund’s trustee, Vasco Trustees Limited (Vasco). Vasco was responsible for accepting and redeeming unitholder subscriptions, paying interest to unitholders, and providing drawdowns to the Borrower.&nbsp;In June 2019 Mayfair 101 launched the M+ Fixed Income notes (Notes) as part of its strategy to transition its funding sources away from the fund (by repaying the fund) and replace it with funding raised in the Notes. It did this by acquiring assets from IPO Group at market value in exchange for cash payments.&nbsp;Between October 2019 and March 2020 the Borrower repaid $9 million in principal to the fund as a result of the IPO Group selling assets for cash.&nbsp;On 31 March 2020, shortly after the global pandemic commenced, the Borrower defaulted on the loan. The loan balance at the time was $77 million.&nbsp;On 22 May 2020 the trustee appointed insolvency practitioners Hamish MacKinnon and Nicholas Giasoumi of Dye &amp; Co as receivers and managers.&nbsp;At the time receivers and managers were appointed the IPO Group held approximately $130 million of assets in 7 countries.

Introduction

Detailed

The demise of IPO Wealth

<h3>The dispute</h3>On 31 January 2020 Vasco was approached by ASIC to discuss the future of the fund .&nbsp;On 22 May 2020 Mr Dunstan filed an affidavit claiming there was a “Sudden Drop in Value of Fund Assets”. &nbsp;The statement was made to support the appointment of receivers and managers over the IPO Group.&nbsp;Mr Dunstan alleged Mr Mawhinney had misappropriated $18 million worth of assets from the fund and yet:<ul><li>the fund never owned the assets in question;</li><li>the fund could only make loans;</li><li>Vasco was the party in control of the fund, not Mr Mawhinney; and</li><li>It was implausible that Mr Mawhinney could have taken assets from the fund.</li></ul>Six days after their appointment Mr Mackinnon and Mr Giasoumi published a report supporting the contention that Mr Mawhinney had unlawfully dealt in the assets. &nbsp;The report mischaracterised the representations made in the fund’s information memorandum.&nbsp;On 15 June 2020 Mr Mawhinney wrote to Vasco and the receivers informing them of their fatal error in failing to check a change in liabilities on a balance sheet. When properly read, the spreadsheet showed no change in net asset position, meaning the assets in question had been paid for in full.&nbsp;In the letter, Mr Mawhinney requested a unitholder meeting to enable the 181 unitholders to discuss the future of the fund. Accompanying Mr Mawhinney’s letter were written requests from 106 unitholders demanding a unitholder meeting be called by Vasco.&nbsp;On 16 June 2020 the Vasco and insolvency practitioners wrote to Mr Mawhinney denying their erroneous reading of the spreadsheet. They also alleged the written requests of unitholders were invalid. Vasco also refused to meet with Mr Mawhinney to discuss a pathway forward for unitholders.&nbsp;On 18 June 2020 ASIC’s instructing solicitor, Hugh Copley, applied to the Supreme Court of Victoria to join ASIC to the proceedings. Previously ASIC were not a party to the legal proceedings.&nbsp;ASIC supported the mistaken position of Vasco and the insolvency practitioners to have the IPO Wealth Holdings group wound up.&nbsp;In a further attempt to save the IPO Group from liquidation, Mr Mawhinney obtained the support of 120 unitholders who had voted on formal resolutions. 96% of the unitholders who voted on the resolutions were in favour of replacing the trustee and terminating the appointment of insolvency practitioners.&nbsp;ASIC told Justice Robson the votes ought to be ignored on the basis that ASIC had issued a misleading or deceptive conduct proceeding against Mayfair 101. &nbsp;&nbsp;In reaction to the votes, Vasco applied for and was granted a silencing order barring Mr Mawhinney from communicating with the fund’s unitholders.&nbsp;On 17 September 2020 Justice Robson wound up the IPO Group, appointing Mr MacKinnon and Mr Giasoumi as liquidators.

The dispute

<h3>The allegations</h3>The liquidators made a series of allegations, including that Mr Mawhinney had:<ul><li>misappropriated assets from the fund;</li><li>transferred investor money to the British Virgin Islands;</li><li>transferred investor assets to the British Virgin Islands;</li><li>operated a Ponzi scheme;</li><li>unlawfully deleted 1,500 documents; and</li><li>unlawfully deleted 6 email accounts.</li></ul>&nbsp;The allegations were unanimously supported by Vasco Trustees and the Australian Securities and Investments Commission. &nbsp;

The allegations

<h3>Public examinations</h3>Over a period of 8 months, Mr Mawhinney was subjected to 7 days of compulsory public examinations by the liquidators.&nbsp;The liquidators used the examinations to attempt to construct legal claims against Mr Mawhinney to support their allegations of impropriety.&nbsp;Mr Mawhinney attended each public examination and repeatedly explained why the liquidators were mistaken in their assessment of the IPO Group. &nbsp;On 23 March 2021 he made the following oral statement:&nbsp;Mr Mawhinney: ...the reason that the fund is wound up is on the basis that we had wrongfully transferred shares to the British Virgin Islands. I deny that fact. Those shares were, in fact, paid in full with cash for the purpose of creating liquidity in the IPO Wealth Holdings Group which also provided the significant capital gains in the IPO Holdings Group. It is imperative for the benefit of the Mayfair Platinum investors that the liquidators transfer the shares that are the rightful properly of 101 Investments Ltd. &nbsp;&nbsp;HER HONOUR: I'm going to stop you there, Mr Mawhinney, because I don't understand what that has – that – what the investors in the Mayfair Platinum group have got to do with the IPO Wealth group. &nbsp;

Public examinations

<h3>The settlement</h3>On 30 November 2022 the Supreme Court of Victoria approved a settlement agreement reached between the liquidators, Mayfair 101 and Mr Mawhinney.&nbsp;The outcome of the settlement includes:<ol><li>Mayfair 101 retains 80 per cent of the assets;</li><li>six court proceedings have been discontinued, including five in the Supreme Court of Victoria where the liquidators were the plaintiff and one issued in the British Virgin Islands where Mayfair 101 was the plaintiff;</li><li>the liquidators have abandoned all claims including that various transactions were uncommercial, insolvent, voidable, a creditor-avoiding disposition, unreasonable director-related transaction, and that damages and equitable compensation should be levied; and</li><li>&nbsp;Mayfair 101 is disallowed from issuing proceedings against the liquidators.</li></ol>Under the terms of settlement, Mayfair 101 retains:<ul><li>100 per cent of a revenue sharing agreement with software company Accloud ($9 million at cost);</li><li>&nbsp;100 per cent of shares in a hospitality payment company Liven ($975k at cost)</li><li>75 per cent of its shares in software company Accloud ($14.6 million at cost); and</li><li>55 per cent of shares in its technology investment Paymate India ($1.6 million at cost).</li></ul>The liquidators have also dropped all claims to intercompany balances.&nbsp;The combined value of the settlement to Mayfair 101 (including forgone debt claims of $18 million) is estimated to be worth approximately $44 million based on the cost price of the assets.&nbsp;

The settlement

<h3>Current status</h3>Last updated: 16 March 2024&nbsp;The IPO Wealth Fund remains free from administration (it has never been in administration).&nbsp;The following Mayfair 101 companies have had liquidators appointed:<ul><li>IPO Wealth Holdings Group Pty Ltd</li><li>IPO Wealth Holdings Group No 2 Pty Ltd</li><li>IPO Wealth Holdings Group No 3 Pty Ltd</li><li>IPO Wealth Holdings Group No 4 Pty Ltd</li><li>IPO Wealth Holdings Group No 5 Pty Ltd</li><li>IPO Wealth Holdings Group No 6 Pty Ltd</li><li>IPO Wealth Holdings Group No 7 Pty Ltd</li><li>IPO Wealth Holdings Group No 8 Pty Ltd</li><li>IPO Wealth Holdings Group No 9 Pty Ltd</li><li>IPO Wealth Holdings Group No 10 Pty Ltd</li><li>IPO Wealth Holdings Group No 11 Pty Ltd</li><li>IPO Wealth Holdings Group No 12 Pty Ltd</li><li>IPO Wealth Holdings Group No 13 Pty Ltd</li><li>IPO Wealth Holdings Group No 14 Pty Ltd</li><li>IPO Wealth Holdings Group No 15 Pty Ltd</li><li>IPO Wealth Holdings Group No 16 Pty Ltd</li><li>IPO Wealth Holdings Group No 17 Pty Ltd</li></ul>&nbsp;Mr MacKinnon and Mr Giasoumi have incurred more than $5 million in fees to date including legal expenses pursuing Mr Mawhinney and his companies.&nbsp;The IPO Wealth Holdings group of companies continue to hold valuable assets. A substantial return of capital to the fund’s unitholders is possible from these assets. &nbsp;&nbsp;The trustee (and therefore the unitholders) may have an entitlement to a legal claim against the liquidators for damages arising from negligence in their assessment of the IPO Group. The unitholders may seek to direct the trustee to pursue this claim on their behalf. &nbsp;

Current status

The IPO Wealth Holdings group was a division of Mayfair 101 which borrowed from the IPO Wealth Fund to finance private equity investments.

The Deputy Commissioner

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ASIC v Mawhinney

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M+ Notes

M Core Notes

Mr MacKinnon is the liquidator responsible for the IPO Wealth Holdings group of companies.

Hamish MacKinnon

User

Dye & Co

Mr Giasoumi is also appointed as liquidator to the IPO Wealth Holdings group of companies.

Nicholas Giasoumi

Mr Dunstan is the head of the company which is the trustee of the IPO Wealth Fund.