Exclusive: USGFX bankruptcy admin makes “significant progress”, Public Examination coming
FNG Exclusive… FNG has learned that the administrator and liquidator for USGFX, BRI Ferrier, has sent out an update letter (see full text below) to former clients and creditors of the bankrupt Australian Retail FX and CFDs broker, stating that it has made “significant progress” since its last report about six months ago.
Specifically, BRI said that it has been busy investigating the company’s affairs, and filing an application for the court’s approval to use trust funds to publicly examine various parties.
BRI said that it has shifted its focus to pursuing possible recovery actions, where the initial step is to hold a Public Examination of key parties involved. A Public Examination is a legal process used to gather evidence, whereby the liquidators can seek orders from the court to compel parties to produce documents to the court and to appear before the court to give evidence under oath on matters pertaining to the company’s affairs. The information obtained can then be used to pursue recoveries for the benefit of creditors, or possibly to prosecute parties for misconduct.
The liquidator added that its application seeks orders to examine numerous parties located within Australia, and also requires production of documentation from various entities and persons.
In its previous update to clients and creditors made in January 2022, BRI said that a staggering $349 million of claims have been made against USGFX – a staggering number considering that this was a relatively small/mid sized broker doing about $25-30 billion per month in trading volume on legitimate client deposits in the $6-10 million range.
At that time, BRI noted that there was just $8 million in available funds to pay all creditors (including former clients), most of which came from a $6 million refund the administrators received from the Australian Taxation Office from previously overpaid taxes. No update on actual recoveries made since then was made in the latest update.
USGFX went bankrupt in mid 2020, its controlling shareholder Soe Hein Minn went missing (and remains at large and in contempt of the courts in Australia), and administrators have been left trying to sort things out while clients and creditors have been waiting for more than two years.
The full text of the update letter sent to creditors and clients of USGFX reads as follows:
6 July 2022
CIRCULAR TO CLIENTS, CREDITORS & CONTRIBUTORIES
UNION STANDARD INTERNATIONAL GROUP PTY LTD (IN LIQUIDATION)
ACN 117 658 349 (Company)
NOTICE OF AN APPLICATION TO THE FEDERAL COURT OF AUSTRALIA
We refer to previous reports concerning this Liquidation and provide a brief update for creditors in respect of upcoming applications to the Federal Court of Australia (Federal Court).
We have made significant progress since our last report, investigating the Company’s affairs and filing an application for the Court’s approval to use the trust funds for, and to, publicly examine various parties.
We confirm that we have been reporting regularly to the appointed Committee of Inspection (COI) as the Liquidation has progressed. That communication is confidential, as it deals with privileged and commercially sensitive information. The COI members have supported our work thus far and our intended actions moving forward, in particular, the Public Examination application.
As mentioned in our previous update, we have shifted our focus to pursuing possible recovery actions, where the initial step is to hold a Public Examination of key parties involved. A Public Examination is a legal process used to gather evidence, whereby Liquidators can seek orders from the Court to compel parties to produce documents to the Court and to appear before the Court to give evidence under oath on matters pertaining to the Company’s affairs. The information obtained can then be utilised to pursue recoveries for the benefit of creditors, or possibly to prosecute parties for misconduct.
On 17 June 2022, we filed an application with the Federal Court for its approval to use the statutory trust funds for the public examinations and to hold a Public Examination. Relevantly, our application seeks orders that we can examine numerous parties located within Australia, and also requires production of documentation from various entities and persons. Our solicitors anticipate that the examinations will run over ten (10) days later this year, subject to the Court’s availability and its further orders.
Ancillary applications for additional examinees (primarily parties located offshore) may also be filed in the near future depending on further legal advice. We also understand that a party representing a group of interested creditors has applied to the Australian Securities and Investments Commission (ASIC) for its approval to participate in the Public Examination process as an Eligible Applicant. That application is still pending before ASIC.
Given that this is a new set of investigations under the Corporations Act, we have filed an Interlocutory Process seeking directions from the Federal Court, approving our use of the trust funds held by the Company for the Public Examination process. This approval application has been scheduled to be heard by Justice Jagot on 25 July 2022 at 10.15am (AEST). Details of the place for the hearing are:
Federal Court of Australia
Law Courts Building
184 Phillip Street,
Sydney NSW 2000
A copy of the Interlocutory Process can be downloaded from:
Subject to Justice Jagot’s determination on this approval application, we intend to request that Her Honour also make orders for the issuance of the Public Examination summonses and orders for production immediately. We note that the Justice Jagot presided over the Trust Application last year, and therefore Her Honour has knowledge of this complex Liquidation and the parties involved. We are unable to share with creditors the Affidavit material which supports the Interlocutory Process, as its contents are confidential and commercially sensitive. However, should any creditors have particular queries about this Interlocutory Process and/or the forthcoming hearing before Justice Jagot, please contact our office.
We intend to provide a more detailed report to all creditors once we have completed the Public Examination process and have a view on what recoveries may be available to pursue. In the interim, we will continue to provide regular reporting to the COI, as the creditors’ appointed representatives.
If you have any queries or wish to be heard by the Court regarding the Interlocutory Process, the Public Examinations or the liquidation generally, please email our team at email@example.com.
UNION STANDARD INTERNATIONAL GROUP PTY LTD (IN LIQUIDATION)
Joint and Several Liquidator