PwC to liquidate Ross Asset Management companies; Warns 'premature to assume anything at this stage in regards to third party recoveries'

By Alex Tarrant

A number of companies associated with Ross Asset Management (RAM) will be liquidated, with receivers PwC appointed liquidators at the Wellington High Court today.

About 900 investors believed they had NZ$450 million invested on their behalf by the 'Ross Group' of companies. However, PwC has so far been able to find about NZ$11 million of actual investments managed by principal David Ross, who was released from hospital on November 21 after receiving compulsory treatment under the Mental Health Act.

“Our appointment as liquidators gives us greater powers to investigate complex transactions and issues, and to distribute assets, which we did not have as Receivers," PwC's John Fisk and David Bridgman said.

The Financial Markets Authority froze the companies' assets last month after receiving several complaints from investors unable to withdraw money they believed had been invested by Ross on their behalf in Australia, the US, Canada, Europe and New Zealand.

A subsequent report from PwC hinted that Ross had been running a Ponzi scheme, where withdrawals to investors are paid out with money coming in from new investors.

After speaking to Ross on his release from hospital, the receivers said they did not expect to locate any further assets of significant value above the miniscule amount already found. 

Liquidation

Receivers PwC issued a press release on Monday saying they would be appointed as liquidators of some Ross Group companies.

“Given the significant shortfall in assets available to investors at present, we need to be mindful that whatever actions are taken in this process are cost effective and recognise the difficult financial position many investors now find themselves in," the receivers said.

"There have been a number of comments in the media about significant liquidation and legal costs that may be incurred in recovering money from investors who received repayments from their portfolios within the last two years. The issues in this insolvency are very complex and involve difficult areas of law and ones that we have not formed a final view on," they said.

“We wish to emphasize it would be premature to assume anything at this stage in regards to third party recoveries; further investigation and legal advice is required. This will then be considered by the Liquidators and the Liquidation Committee. Any decisions on pursuing third party recoveries will be considered against the costs, risks and benefits of the potential claims. The last thing we want is for investors to get ahead of themselves by incurring additional legal costs or expecting great recoveries from this source. ”

See the release from PwC below:

PwC Partners John Fisk and David Bridgman as Receivers and Managers to Ross Asset Management Limited and related entities today made applications to the High Court in Wellington for their appointment as liquidators to a number of the Ross Group companies. This step was anticipated in their report to the Court on 13 November as the most appropriate way to manage a number of the issues arising from the Ross Group receiverships.

The High Court has ordered John Fisk and David Bridgman be appointed liquidators of the following Ross Group companies:

·        Ross Asset Management Limited (In Receivership)

·        Bevis Marks Corporation Limited (In Receivership)

·        McIntosh Asset Management Limited (In Receivership)

·        Mercury Asset Management Limited (In Receivership)

In addition, the Court was advised shareholder resolutions are to be passed today to appoint John Fisk and David Bridgman as Liquidators to the following Ross Group companies:

·        Dagger Nominees Limited (In Receivership)

·        Ross Investment Management Limited (In Receivership)

·        Ross Unit Trust Management Limited (In Receivership)

·        United Asset Management Limited (In Receivership)

The first liquidators’ statutory report for all of the above companies will be produced and posted to investors later this week. 

Mr Fisk notes, “Our appointment as Liquidators gives us greater powers to investigate complex transactions and issues, and to distribute assets, which we did not have as Receivers. There are a number of matters that will need to be addressed in the liquidations early in the New Year. This includes a meeting of creditors that will be conducted by postal vote by 8 February 2013 to confirm our appointment as Liquidators and to form a Liquidation Committee to provide investor input to assist with the liquidations.”   

In regard to forming a Liquidation Committee, the Liquidators are requesting investors and creditors to nominate members of the Committee by sending details of nominees to them at the PwC website at http://www.pwc.co.nz/rossassetmanagement/

It is important all nominations for the Liquidation Committee are received within the next 48 hours so that voting forms can be included in the report to be sent to all investors and creditors later this week. 

Mr Fisk says, “Given the significant shortfall in assets available to investors at present, we need to be mindful that whatever actions are taken in this process are cost effective and recognise the difficult financial position many investors now find themselves in. There have been a number of comments in the media about significant liquidation and legal costs that may be incurred in recovering money from investors who received repayments from their portfolios within the last two years. The issues in this insolvency are very complex and involve difficult areas of law and ones that we have not formed a final view on. 

“We wish to emphasize it would be premature to assume anything at this stage in regards to third party recoveries; further investigation and legal advice is required. This will then be considered by the Liquidators and the Liquidation Committee. Any decisions on pursuing third party recoveries will be considered against the costs, risks and benefits of the potential claims. The last thing we want is for investors to get ahead of themselves by incurring additional legal costs or expecting great recoveries from this source. ” 

Given the number of companies involved in the liquidations and the intermingled nature of how the companies appear to have operated, Mr Fisk says, “A further option being considered as a priority will be whether an application will be made to the Court to have all assets and liabilities of the companies pooled under the applicable provisions in the Companies Act.”