Receivers appointed for GSI

ADAM Nikitins and Simon Cathro, partners of Ernst & Young, were appointed receivers and managers of troubled lender Gippsland Secured Investments on Tuesday.

Trustee, The Trust Company, appointed receivers and managers as a result of GSI defaulting under the terms of the trust deed and charge and pursuant to Federal Court orders handed down on Monday.

In the New South Wales Federal Court, Justice Kathleen Farrell rejected a bail-out proposal by community and business leaders for GSI.

GSI froze its $150 million in local investor funds in July after a review of its lending book by revealed higher-than-expected debt. Its roughly 3500 account holders are mostly members of the Gippsland community.

Justice Farrell expressed concern about the rescue plan on Monday, calling it “amorphous’’ and questioning the availability of the roughly $2.2 million in funds that had been pledged by members of the rescue group.

Counsel for the Trust Company, Alexander Street SC, told the court on Monday the rescue plan went against the best interests of debenture holders, as the funds pledged were inadequate to save the company from collapse. He described the company as a car whose “wheels have fallen off, the engine is broken and there’s no driver.’’

The receivers and managers have established an information hotline with the assistance of Link Market Services, who will be assisting with note holder enquiries, mailing correspondence, distributing payments and other logistical matters.

The hotline number is 1300 551 378. Alternatively, emails can be sent to gsi@linkmarketservices.com.au