Assist Finance was established in 1960 and operated successfully under a series of different owners from that time.
Assist Finance was purchased by Jason Di Iulio for $ 3,200,000 in 2007.
Assist Finance operated as a non-bank lender that was funded by unsecured investments and direct mortgage investments. The operations of Assist Finance were governed by ASIC.
The type of investment activity undertaken by Assist Finance carried higher risks for greater rewards but greater potential losses. Assist Finance always disclosed this to its investors in its ASIC registered prospectuses.
Notwithstanding this Assist Finance operated successfully for more than 50 years paying above market returns to investors. In 2013 ASIC intervened in Assist Finance as a result of heightened supervision of the industry following the failure of numerous other investment funds. Many had failed their regulatory obligations and obligations to their investors. Assist Finance had not. ASIC's intervention was purely discretionary.
ASIC issued a Stop Order Notice on Assist Finance's Prospectus 14 on 4 June 2013. Assist Finance had since its inception always complied with all regulatory requirements and delivered excellent investment returns and was compliant at the time of the issue of the Stop Order. In fact, in the year ending 30 June 2012, Assist made a pre-tax profit of $636,452, up from $457,792 in the previous financial year. These reports were reviewed and audited by Ernst & Young and are publicly available. ASIC required that additional disclosures be included in the Prospectus. These added disclosures related to the provision of second mortgage loans, the associated risks and collection procedures, determination of the nett security value and the forecasting of cash flows for second mortgage loans.
Assist Finance and its legal advisors' engaged in ongoing discussion and correspondence with ASIC. Assist Finance explored numerous ways to address ASIC's disclosure requirements and meet their disclosure requirements and their associated increased compliance costs, but to no avail. It was well accepted that, in particular during an economic downturn, it is necessary to raise unsecured notes to maintain liquidity. There is, from time to time, an imbalance between the term for redemption of unsecured notes and the realisation from loans. The ASIC Stop Order notice precluded this.
As a result, and in the absence of reaching an acceptable disclosure outcome with ASIC and with the lodgement of the Stop Order notice, Assist Finance's ability to continue became uncertain and ultimately made the Assist Finance business unviable. The combination of all these factors presented the Assist Finance Board with an insurmountable challenge and led to the Board seeking independent advice that resulted in the recommendation to proceed with a Moratorium in the interests of maximising unsecured investor returns.
"We were disappointed that, despite our best efforts, we could not negotiate a better outcome for the business and for unsecured investors. We had no choice but to accept ASIC's decision and seek to implement a course of action under advice that would deliver the maximum return to Noteholders," said Mr Jason Di Iulio.
Unsecured investors were then provided with numerous detailed reports prepared by both Assist Finance and its Trustee, Cremorne Capital Limited, along with other independent consultants, in order to consider whether to place Assist Finance into Administration or to implement and orderly realisation of the assets of Assist Finance, or Moratorium , as recommenced by the various Independent reports.
Unsecured investors, being fully informed as determined by ASIC, voted overwhelmingly in favour of implementing the Moratorium , which in effect meant that Assist Finance would realise the assets of Assist finance over a two year period and after costs any surplus would be distributed to unsecured investors.
The terms of the Moratorium required Assist Finance to operate on a minimum operational cost structure, required cash contributions by Jason Di Iulio and financial concessions from all Directors of Assist Finance. All of which were made during the course of the Moratorium and confirmed by both the Trustee and Ernst & Young.
The terms of the Moratorium also included the requirement that the operations of the Moratorium were to be overseen by Assist Finance's Trustee, the Trustee's independent consultant, an Adelaide based Chartered Accountant, in addition to Assist Finance's independent Auditors Ernst & Young.
The Moratorium was implemented on 31 January, 2014 and although was originally scheduled to complete on 31 January, 2016 was extended with the approval of the Trustee to 31 December, 2016, to permit the completion of Assist Finances' outstanding financial reports and the collection of its remaining loans, at which time the Moratorium came to an end and was completed.
At the completion of the Moratorium being 31 December, 2016, Assist Finance had no remaining assets or staff and in effect the company became a non-trading dormant entity.
"Whilst the performance of the Moratorium did not achieve the outcome originally estimated primarily as a result of compliance costs including Trustee Fees, the Moratorium has delivered the best possible financial outcome to unsecured investors in the circumstances. This has been confirmed by various independent reports." said Jason Di Iulio.
"There is no question that a number of unsecured investors are dissatisfied with what has occurred, however the fact remains that higher return investments always come with higher risks. These risks were always disclosed to unsecured investors and notwithstanding they chose to avail of the higher reruns for more than 50 years. The reality is, every action and every cent, every cent, has been accounted for as determined by the Assist Finance's Trustee, their independent consultant and Assist Finance's independent and external Auditor, Ernst & Young. Futher all of this has been provided to unsecured investors in numerous detailed reports. Although unsecured investors may not be happy with the resultant outcome, the facts are the facts." said Jason Di Iulio.