Creditors and former clients of bankrupt Australian Retail FX broker Union Standard International Group Pty Ltd, which operated the USGFX brand, are going to have to wait a little longer to find out just how much money they will be getting back.

USGFX liquidator BRI Ferrier put out an updated fact sheet and timetable, following a hearing held in Australia bankruptcy court in front of Federal Justice Jayne Jagot last week on June 24. The update contained some interesting new disclosures, covering some of the following topics.

Timing

Justice Jagot called for the liquidators and other party representatives to make final submissions on claims and recoveries by September 17. A Final Hearing on the matter will be held over a two day period October 28-29. Assumedly, the court will start directing the liquidators to start making reimbursements to both former clients and creditors of USGFX soon after those dates.

Recovery of Funds

Overall, BRI confirmed that USGFX clients have lodged many millions in claims during the liquidation, and that there are insufficient funds currently available to discharge those claims in full.

BRI Ferrier said that it has recently entered into an arbitration process with one of the offshore Money Processors, and is “hopeful” of a successful recovery from this party. No specific amount was given as to how much money might be recovered.

The liquidator is also exploring a possible recovery in respect of settlement monies paid out to former clients of Maxi EFX Global AU Pty Ltd (trading as EuropeFX), the company’s former Client Authorised Representative. BRI said it is currently collating information in this respect.

Locating controlling shareholder Soe Hein Minn

BRI noted that it has engaged a private investigator to assist in locating “key individuals/parties located offshore, in particular Myanmar” – meaning Soe Hein Minn, the company’s controlling shareholder who remains AWOL and in contempt of court in Australia for refusing to cooperate with the liquidators.

While BRI said that these investigations are ongoing, they have been hampered by the political unrest in Myanmar and the COVID-19 pandemic.

Trading versus Investor Client Representatives

At the June 24 hearing the Court confirmed the appointment of two “contradictors” acting as representatives for the major creditor classes, being “trading” clients and “investor” clients, and their respective legal counsels. The contradictors’ role is to provide informed argument to the Court on behalf of their respective class of creditor, whilst the Liquidators lead the majority of the factual evidence. The appointed contradictors are both members of the Committee of Inspection and are therefore well-informed on the liquidation.

We believe that the split was made because beyond the company’s “usual” trading clients, whose funds (or at least some of them) were held in segregated bank accounts, there emerged a much larger amount of claims – perhaps more than $100 million – based on high-interest offshore investment products which were offered via USGFX, although their license did not permit such activity.

Payment of Costs

The Court also made Interim Orders approving the use of the Trust funds to pay certain costs that have already been incurred, and those to be incurred relating to the proceedings. Further, the Court set a regime for the approval of costs moving forward, being first by the Committee of Inspection, or failing which the Court. Access to funding is essential in order to allow the Liquidators to pursue recovery actions for the benefit of creditors including but not limited to for instance, tax refunds.

So far, the Court determined that the Liquidators are justified in paying their remuneration approved by the Committee of Inspection in the amount of $1,423,849.50 plus GST from the Trust Accounts.