Brite Advisors Pty Ltd
Frequently Asked Questions
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The Receivers’ investigations remain ongoing. Please continue to check this page for updates. The Receivers can be contacted by email: briteadvisors@mcgrathnicol.com
1. What is the status of the Receivers’ investigations to date?
The Receivers filed their fifth report to the Court on 4 December 2024 (Fifth Report). This follows and builds upon:
the Receivers’ report to the Court dated 24 January 2024 (Second Report);
the Receivers’ report to the Court dated 4 March 2024 (Third Report); and
the Receivers’ report to the Court dated 9 August 2024 (Fourth Report).
Prior to the Receivers’ appointment as Receivers and Managers, they were appointed as Investigate Accountants, and in that role filed a report to the Court dated 8 December 2023 (First Report).
For details in relation to the matters arising from the Receivers' investigations, including suspected contraventions and offences by Brite Advisors and its directors and officers, please refer to:
The Receivers continue to investigate potential recovery actions against third parties and the directors and officers of Brite Advisors. Irrespective of the merits of these claims, they will only be pursued if there is likely to be a commercial return to Beneficiaries. To avoid compromising any recovery actions, the Receivers are unable to disclose any further information as to the nature of the potential claims that they are investigating.
The Receivers understand that the Australian Securities and Investments Commission’s (ASIC) investigation relating to Brite Advisors and its directors and officers is ongoing . This is separate to the Receivers' investigations into potential recovery actions.
Please see ASIC’s website for further information relating to the status of its investigations into Brite Advisors.
2. What actions will be taken against the directors and related parties with respect to any identified misconduct?
Liquidators and Receivers have broad powers of investigation and a statutory duty to report any suspected contraventions of the Corporations Act 2001 (Cth) by Brite Advisors and its directors and officers to ASIC.
ASIC also have powers to bring enforcement action. The successful pursuit of such claims by ASIC can result in financial penalties, banning orders and in some cases jail time. The Receivers and Liquidators are working closely with ASIC and will continue to keep ASIC updated as to the status of their investigations.
The Receivers continue to investigate potential recovery actions against third parties and the directors and officers of Brite Advisors. Irrespective of the merits of these claims, they will only be pursued if there is likely to be a commercial return to Beneficiaries. To avoid compromising any recovery actions, the Receivers are unable to disclose any further information as to the nature of the potential claims that they are investigating.
3. How are the Receivers being paid for the work they are doing?
The Court Orders made on 21 December 2023 provided that, subject to Court oversight and approval, the Receivers’ fees, costs, and expenses (including those relating to their former appointment as Investigative Accountants) are to be paid from the Client AuM.
The Receivers’ remuneration, fees and costs are required to be reviewed and approved by the Court prior to payment, to ensure that the charges are reasonable, and the work undertaken has been necessary and properly performed. All Corporate Trustees are notified of the respective amounts and provided with the Receivers’ remuneration and costs and expenses reports immediately after they are submitted to the Court.
4. Why have both Receivers and Liquidators been appointed? What’s the difference?
The Receivers are appointed over all "Trust Assets" held by Brite Advisors, as that term is defined in the Court Orders made on 6 February 2024, which includes the Client AuM. The Receivers are responsible for holding and preserving, and in accordance with the Court orders, managing the Client AuM, including protecting the interests of underlying Beneficiaries and returning Client AuM to Beneficiaries in the manner that the Court orders.
The Receivers are the only persons authorised to act on behalf of Brite Advisors with respect to the Trust Assets and the directors' powers are suspended.
The Liquidators are appointed to Brite Advisors and are responsible for winding up the affairs of Brite Advisors and have broad powers of investigation and have control of any property of Brite Advisors that is not part of the Trust Assets. As the Receivers have previously reported, Brite Advisors has no material property other than the Trust Assets.
These are two very separate roles.
So, what does this mean for you? In summary, the Receivers will be dealing with you as a Beneficiary or Corporate Trustee with an interest in the Client AuM, which is under the control of the Receivers.
5. How has the variance in the Client AuM occurred, how can I obtain more information about this?
The Receivers undertook a detailed analysis of the variance in the Client AuM, as detailed in section 6 of the Third Report. This analysis has been updated and is set out at section 4.1 of the Fifth Report.
As at 29 November 2024, the Receivers estimate that Brite Advisors held circa USD$714.0m in Client AuM. This represents an estimated USD($11.2m) (or 1.5%) shortfall to total Beneficiaries’ claims as at 13 December 2023, excluding the impact of potential taxation liabilities (refer to FAQ 27).
The quantum of the shortfall varies with time and may materially change due to a number of factors.
6. What are the next steps in the Receivership? How long will it take?
On 4 December 2024 the Court made orders permitting the Receivers to publish the Explanatory Memorandum and the Receivers Fifth Report (December Orders). Corporate Trustees and Beneficiaries have an opportunity to provide their feedback to the Receivers on the proposed distribution of the Trust Assets set out in the Explanatory Memorandum. This consultation period concludes on 31 January 2025 (Consultation Period).
The Consultation Period is discussed further at FAQ 26.
As part of the process of determining what distribution should be made to each Beneficiary, the Court ordered that the Receivers verify what investments Brite Advisors should have held for each Beneficiary as at 13 December 2023 and the value of those investments, set out in a Valuation Notice.
The Valuation Notice process is discussed further at FAQ 23.
7. Will the Receivers be able to make an interim distribution to Beneficiaries so a portion of my investment can be returned?
The Receivers' proposal for the distribution of the Client AuM does not currently contemplate any distribution to Beneficiaries before the Court makes orders on how a distribution should occur. See further details in FAQ 9 and 24.
The Court has approved a protocol which enables the Receivers to adjudicate Beneficiary requests for the withdrawal of funds. If you do need funds from your pension to meet your living costs or to avoid financial hardship, please speak with your pension administrator.
8. Why can’t the Receivers determine the assets contributed by each investor and distribute those?
A simple distribution by reference to the records held by Brite Advisors is not possible.
Beneficiaries may have understood that certain investments were held for them by Brite Advisors, received account statements that identified specific asset holdings with Brite Advisors at various times, or otherwise received reassurance from Brite Advisors (or other parties) relating to the assets held for them. However, this does not necessarily mean that those investments were actually held by Brite Advisors. This applies regardless of: (i) whether the investments were in the form of a model portfolio or bespoke investment; or (ii) whether Beneficiaries understood that their assets were purported to be held on a “segregated” basis. See the Receivers’ Fourth Report at [2.1.14], [2.1.17] – [2.1.18], [2.1.23] – [2.1.26], [5.6.1] – [5.6.2], [5.6.27] – [5.6.48], [6.8], and [6.9].
The Explanatory Memorandum explains that Beneficiaries will fall into six different categories which will determine what pool of assets they are entitled to claim against, and how their distribution will be determined. Some Beneficiaries’ may have claims in multiple categories. Those categories are set out at Appendix A of the Explanatory Memorandum.
The Receivers will write to individual Beneficiaries separately to advise which category or categories they fall into.
9. When can a distribution be made?
No distributions can be made until such time as the Court makes orders sanctioning the distribution method. The process and estimated timetable to obtain orders from the Court enabling distribution of the Client AuM is detailed in the Fourth Report at [3.5.1] – [3.5.4] and updated in the Fifth Report at 2.2.
The timetable will be impacted by any material disputes raised by Interested Parties to the Receivers' proposed distribution method and / or the ability to resolve Brite Advisors' tax position in a timely manner .
On 13 December 2024 the Court made orders (December Orders) permitting the Receivers to publish the Explanatory Memorandum and the Fifth Report .
Following publication of the Explanatory Memorandum and the Fifth Report, Corporate Trustees and Beneficiaries have an opportunity to provide their feedback to the Receivers on the proposed distribution of the Trust Assets set out in the Explanatory Memorandum. This period of consultation will conclude on 31 January 2025 (Consultation Period). Refer to FAQ 26.
By Friday, 28 February 2025 the Receivers will file a further application with the Court for directions relating to the distribution of the Trust Assets (Distribution Methodology Application). The Distribution Methodology Application will be prepared with the benefit of the feedback provided during the Consultation Period and will incorporate any changes to the proposed distribution methodology that the Receivers consider appropriate or necessary.
By 3 March 2025 the Receivers will publish the Distribution Methodology Application and provide notice that any Corporate Trustee, Beneficiary or other person asserting an interest in the Trust Assets may apply to the Court in these proceedings for leave to be heard as an interested party on the Distribution Methodology Application.
By Friday, 14 March 2025 any applications for leave to be heard must be filed with the Court and served on the Receivers .
On Friday, 21 March 2025 at 9am (AWST) / 11.30am (ACDT) there will be a 'first return date' hearing to commence the process of the Court’s assessment and ruling on any applications for leave to be heard that have been filed with the Court. The applications will not be heard substantively or determined at this hearing.
The Distribution Methodology Application hearing has not been listed by the Court at this stage and will not occur until any applications for leave to be heard have been determined by the Court.
For additional information on the proposed Distribution Methodology Application refer to FAQ 27.
10. Will I get all my money back and when?
As at 29 November 2024, the Receivers estimate that Brite Advisors holds circa USD$714.0m in Client AuM and has an estimated USD($11.2m) (or 1.5%) shortfall to Beneficiaries’ claims as at 13 December 2023, excluding the impact of potential taxation liabilities. The quantum of the shortfall varies with time and may materially change due to a number of factors.
The factors impacting the shortfall are explained in detail at section 6 of the Receivers’ 4 March 2024 report, together with section 5 of the Fifth Report.
Receivers and Managers' Report dated 4 March 2024 (Third report)
Receivers and Managers' Supplementary Report to Court dated 4 December 2024 (Fifth Report)
Section 4 of the Explanatory Memorandum contains details as to how you will receive your distribution.
11. What about the existing Client AuM? How is this being managed?
The Client AuM predominantly remains in accounts with IBA, which are under the control of the Receivers.
On 6 March 2024, the Court approved the engagement of a qualified interim fund manager to provide financial services, including:
monitoring the Client AuM;
providing recommendations to the Receivers on steps appropriate to manage risk and adherence to the applicable investment portfolio mandates; and
upon the instructions of the Receivers only, trade the Client AuM as needed to achieve this.
The Interim Fund Manager's appointment is to assist the Receivers in maintaining and preserving the value of the Client AuM. This is an important step in ensuring the ongoing management of the Client AuM for the benefit of the Beneficiaries. The appointment is an interim measure only to manage the Client AuM while the Receivers work towards developing a distribution proposal to return the Client AuM to the Beneficiaries.
On 17 June 2024, following the orders made by the Court on 5 June 2024 following conferral with IBA, BML Funds Management Pty Ltd (BML) was appointed Interim Fund Manager.
In relation to model portfolio investments, the rebalanced Client AuM is now invested in accordance with portfolio mandates, which comprises a broadly diversified portfolio and will continue to be managed accordingly.
In relation to bespoke investments, these assets are being monitored and reconciled on a regular basis.
As reported in the Fifth Report, Client AuM invested on the IB Platform (both model portfolio and bespoke assets) have performed favourably with aggregated growth of approximately 13% for the period from 13 December 2023 to 29 November 2024.
Weekly portfolio reports produced by the Interim Fund Manager are available via the Brite Advisors portal on the McGrathNicol website.
12. I hold bespoke investments, my assets are not being managed by the Interim Fund Manager and will be subject to market fluctuations in the period up to distribution. Why am I not permitted to exercise trades during this time?
The Receivers obtained orders from the Court on 27 March 2024 that they would be acting properly and are justified in refusing to act on specific trading instructions received from any third party, including individual Beneficiaries, the Corporate Trustees, and any financial advisor. due to (i) the difficulty with forming a view as to any individual Beneficiary’s interest in the specific assets the subject of the instruction, and (ii) the risk that actioning any dealing instruction will prejudice another Beneficiaries’ position with respect to the Client AuM. This is addressed in the affidavit of Linda Smith dated 26 March 2024, which can be accessed here.
Further information on the proposed future steps relating to bespoke assets, is listed in the Twelfth Affidavit, which can be accessed here. In this regard, the Receivers note:
After completion of the upcoming entitlement valuation process, the Receivers intend to seek further orders from the Court to enable them to offer Beneficiaries who hold “Eligible Bespoke Assets” (which is defined below) the option to instruct the Receivers to sell these assets (Bespoke Trading Application) and for the Receivers to act on those instructions.
Eligible Bespoke Assets are defined at paragraph 68 of the Twelfth Affidavit (i.e. bespoke assets that are not mixed with the model portfolio) which are either:
(i) Without variance and are held by single and multiple beneficiaries; or
(ii) With variances but are only held by a single beneficiary.Bespoke assets that do not meet the above definition are unlikely to be included in any Court Orders as part of the Bespoke Trading Application, noting the potential prejudice this could cause to other Beneficiaries.
It is important that the entitlement verification process be completed prior to any change in respect of bespoke assets, to ensure a concluded view can be formed as to the ability to de-risk any bespoke assets. Further, there are several important considerations to be worked through, prior to the submission of the Bespoke Trading Application to the Court. These considerations are set out in further detail as paragraph 70 of the Twelfth Smith Affidavit.
The process contemplated will not result in the early return of any funds or assets. The proceeds of any selldown will remain with the Receivers held on trust for the Beneficiaries. The process will simply allow certain bespoke investors to derisk certain investment positions.
The Receivers invite feedback in relation to the future treatment of bespoke assets during the Explanatory Memorandum consultation period, refer to FAQ 26.
In the meantime, (i) all Bespoke Assets remain subject to Asset Preservation Orders and are unable to be traded, such that the Receivers are not permitted to undertake any trading of Bespoke Assets, (ii) although the Receivers have set out a proposed definition of "Eligible Bespoke Assets" within the Twelfth Smith Affidavit, the Receivers have not at this stage obtained any orders from the Court in relation to the definition of Eligible Bespoke Assets or the sell down of Bespoke Assets (as this is to form part of the Bespoke Trading Application).
13. Can Beneficiaries or Corporate Trustees provide trading instructions directly to or contact the Interim Fund Manager?
No, the Interim Fund Manager will be managing the model portfolios on an aggregate basis in accordance with the 6 March 2024 Court orders at the instruction of the Receivers.
Link: Court Order 6 March 2024
14. Will individual trade requests be considered?
For several reasons including, but not limited to, the identified variance and the comingling of the Client AuM, the Receivers are not able to consider specific trade requests from either Corporate Trustees or Beneficiaries at this time.
This position was confirmed by the Court pursuant to an order made on 27 March 2024.
15. Is the existing Client AuM safe? What protections are in place?
The Court has made Asset Preservation Orders and other Court Orders to protect the Client AuM (including appointment of the Interim Fund Manager) whilst work is being undertaken to:
quantify and reconcile Client AuM losses, and
progress a strategy to ultimately manage and return Client AuM back to Beneficiaries in an equitable manner.
This means that only the Receivers and their authorised representatives can lawfully deal with the Property of Brite Advisors, as authorised by the Court Orders.
16. Is the Client AuM Segregated?
The Receivers are aware that Brite US has informed its clients that it believes their assets are segregated from Client AuM held for other Beneficiaries.
The Receivers’ Fourth Report details that during the period from June 2021 to September 2023, there were several arbitrary transfers of Client AuM between IBA Accounts which appear to be directed at demonstrating to third parties that there was segregation of certain Beneficiaries’ Client AuM from others. The timing of these arbitrary transfers suggests that they were made primarily in response to financial regulatory investigations commenced in the US and the UK.
The Receivers have further investigated these matters and have provided an update in the Fifth Report, reaching the conclusion that the segregation of assets into different IBA Accounts does not constitute an effective segregation of Beneficiaries’ interests in a legal sense nor did it give rise to a ring fencing of assets to protect certain accounts from the shortfall.
17. Can the Receivers provide me with an updated investment statement?
As part of the entitlement verification process, Beneficiaries were provided with access to a Valuation Notice and supporting information.
If you have not yet received access to your Valuation Notice and have not otherwise received any communication from the Receivers relating to reasons why your Valuation Notice may have been withheld, please contact us as soon as possible at BriteAdvisorsValuation@mcgrathnicol.com.
Please note that the amount shown on your Valuation Notice is not the amount which will be distributed. Your Valuation Notice sets out the value of the assets that Brite Advisors ought to have held on your behalf as at 13 December 2023. The distribution amount will be calculated as proposed in the Explanatory Memorandum. Refer to FAQ 23 for further information pertaining to the Valuation Notice Process.
18. Can I withdraw funds?
The Court has approved protocols for dealing with withdrawal requests. As part of those protocols the Receivers are acting properly and are justified in:
only assessing and processing regular pension withdrawals of a Beneficiary’s investment that were in place as at 9 November 2023 can be considered; and
declining to assess or process a withdrawal request where that withdrawal would result in total withdrawals since 9 November 2023 exceeding more than 50% of the recorded value of their investment, calculated by reference to the value of a Beneficiaries’ cash holdings and model portfolio assets as at 13 December 2023.
The Receivers will also assess withdrawal requests which were not in place as at 9 November 2023 in circumstances of financial hardship. See FAQ 22 for further information.
The calculation of the 50% cap on regular pension withdrawals excludes the value of any bespoke asset holdings.
The protocol is intended to enable those Beneficiaries who have relied on regular withdrawals from their pension investments to continue to have access to those amounts, in a way that is fair and does not prejudice other Beneficiaries, given the identified variance in the Client AuM.
The Receivers recognise the importance of ensuring that Beneficiaries who rely on their pension for living costs continue to have access to their regular payments. If you do need funds from your pension to meet your living costs or to avoid financial hardship, please speak with your pension administrator who will be able to assist you with submitting a request to the Receivers.
In the event you have invested directly with Brite Advisors, please send your pension payment withdrawal requests by email to briteadvisors@mcgrathnicol.com, including all necessary supporting documentation. Please include "Pension payment withdrawal request" in the email subject line to allow the request to be efficiently categorised and allocated to a team member from the Receivers' team for processing.
19. Can I transfer all my money to another fund?
The Receivers are unable to consider or process requests to transfer your pension investments out of Brite Advisors to another fund manager or custodian at this time, given the current Court Orders restricting distributions.
Please note, the Court Orders are not intended to be permanent. Rather they are intended to protect and preserve the Client AuM while the Receivers develop their proposal for a distribution process for return of the Client AuM.
20. Can I appoint a new Financial Advisor?
The appointment of a new Financial Advisor is a matter for you as a Beneficiary.
Should you appoint a new Financial Advisor, please advise our office (with documentary evidence) and we will update our records accordingly. As noted above, the Receivers will be unable to provide individual valuation statements to Beneficiaries.
21. I am a direct investor with no Corporate Trustee, can I still make a pension withdrawal request?
Yes, Beneficiaries with no Corporate Trustee wishing to request a pension withdrawal should contact the Receivers office directly at briteadvisors@mcgrathnicol.com.
22. I don’t think I meet the pension withdrawal criteria, however, I am experiencing financial hardship, can the Receivers help me access my investments?
The Receivers are empowered by the Court Orders to approve withdrawals required by a Beneficiary due to genuine financial hardship and will consider such requests on a case-by-case basis. Please contact the Receivers’ office at briteadvisors@mcgrathnicol.com if you wish to submit a withdrawal request on the basis of financial hardship.
23. Beneficiary Valuation Notice Process
The Court Orders require the Receivers to calculate Beneficiaries’ entitlements by reference to the value of the money and investments which should have been held on behalf of each Beneficiary as at 13 December 2023.
The basis of the Receivers' calculation of each Beneficiaries' entitlement is set out FAQ – Valuation Notice, available here. In short, the Court Orders permitted the Receivers to adjust the 13 December 2023 Data to address various issues identified by the Receivers arising from Brite Advisors' recording of historical data (these issues are explained in the Receivers' update dated 23 October 2024 and detailed in the Twelfth Smith Affidavit). The adjustments made to the 13 December 2023 Data, included:
adjusting the dividend data to correct the material errors in the reporting of the dividends earned by Beneficiaries;
removing all withholding tax amounts applied to Beneficiaries investments; and
valuing the entitlements related to Minerva Notes at cost price.
The Receivers have undertaken these adjustments, and produced Valuation Notices for most Beneficiaries.
The Court Orders establish a framework for Beneficiaries to access, review, and confirm or dispute their Valuation Notice.
Beneficiaries are required to undergo an identity verification process before being given access to their Valuation Notice. Once access has been given, Beneficiaries can accept or dispute their Valuation Notice.
If you have not yet completed your identity verification, please do so as soon as possible or contact the Receivers as soon as possible at BriteAdvisorsIdentification@mcgrathnicol.com.
A small amount of Valuation Notices have been withheld. The Receivers have written to all Beneficiaries whose Valuation Notices have been withheld to explain why that is the case. If you have not yet received access to your Valuation Notice and have not otherwise received any communication from the Receivers relating to reasons why your Valuation Notice may have been withheld, please contact the Receivers as soon as possible at BriteAdvisorsValuation@mcgrathnicol.com.
It is important to note that the value of a Beneficiary's Client AuM set out in their Valuation Notice is not the amount that the Receivers propose to distribute to the Beneficiary from the Client AuM. The Valuation Notice sets out the value of the assets that Brite Advisors ought to have held on behalf of the relevant Beneficiary as at 13 December 2023. The final distribution amount will be calculated as proposed in the Explanatory Memorandum and by reference to the Valuation Notice. Beneficiaries and Corporate Trustees have the opportunity to provide feedback and ask questions in relation to the proposed method of distribution as detailed in FAQ 26.
24. What does the Explanatory Memorandum propose?
The Explanatory Memorandum explains how the Receivers propose to distribute the Client AuM . Beneficiaries and Corporate Trustees are encouraged to read the document carefully, consider how it impacts them, seek appropriate legal and financial advice, and provide any feedback they may wish to provide to the Receivers.
If there is anything in the Explanatory Memorandum which you do not understand, you can write to the Receivers to ask questions, and the Receivers will provide clarification where they are able to.
Feedback must be provided in writing by 31 January 2025 to BriteAdvisorsDistributionFeedback@mcgrathnicol.com.
The Receivers are proposing that the distribution be made as follows.
Beneficiaries will fall into six different categories, which will determine what pool of assets they are entitled to claim against, and how their distribution will be determined. Some Beneficiaries may have claims in multiple categories.
Certain assets will be liquidated and pooled into a single fund, which is referred to as the ‘Deficient Mixed Fund’ in the Explanatory Memorandum at section 2.1.2, but includes all securities held on the Interactive Brokers Platform. Certain specific holdings, identified at (3) and (4) below, are excluded from the Deficient Mixed Fund. Those Beneficiaries with an entitlement to the Deficient Mixed Fund, will be distributed a share of these funds, net of the Receivers’ fees, costs and expenses (see section 3.3.17 of the Explanatory Memorandum) and any other amounts that the Court orders be withheld (including, for example, certain tax liabilities - see section 4.5 of the Explanatory Memorandum), proportionate to the value of their entitlement, which will have been confirmed in the Beneficiaries’ Valuation Notice. The effect of this is that these Beneficiaries will share equally in the shortfall.
Where Beneficiaries deposited cash into Brite Advisors’ bank account on or after 16 October 2023 and those funds were not transferred to the Interactive Brokers Platform, that cash and any interest earned will be returned to those Beneficiaries. A fee representing a proportionate share of fees, costs and expenses of the Receivers for their work in relation to those assets (along with any tax or other liability linked with the assets) will be payable by the Beneficiary or deductible from their distribution.
All structured notes held on the Moventum Platform in the GBP and USD accounts, as well as the cash proceeds of those notes, will be transferred back to the relevant Beneficiaries. A fee representing a proportionate share of fees, costs and expenses of the Receivers for their work in relation to the Moventum Platform Assets (along with any tax or other liability linked with the assets) will be payable by the Beneficiary / deductible from their distribution.
Any Beneficiary who held Minerva Notes as at 13 December 2023 will hold no rights to those notes and will instead have an entitlement to the Deficient Mixed Fund equal to the funds provided by the Beneficiaries to Brite Advisors to purchase those notes. Any recoveries relating to the Minerva Notes will be contributed to the Deficient Mixed Fund.
As reflected in the Verified Entitlements in the Valuation Notices, Beneficiaries’ entitlements have been reduced by the amount of any Surrender Rebate owing by them to Brite Advisors.
The total amount of each Beneficiary’s pension withdrawals received after 13 December 2023 (if applicable) will then be deducted from that Beneficiary’s distribution.
The Receivers will write to individual Beneficiaries separately to advise which category or categories of Beneficiary you fall into, as set out in Appendix A of the Explanatory Memorandum.
How will I receive my distribution?
The distribution will not be made all at once. Rather, it is proposed that an amount (yet to be determined) will be retained to cover potential liabilities and ongoing costs for matters that have not been resolved at the time of the first distribution.
Those Beneficiaries receiving notes transferred from the Moventum Platform will receive these instruments in specie (or cash if the notes have reached maturity). Otherwise, all other Beneficiaries' distribution will be made to their Corporate Trustee (where they have one) in the currency in which their account with Brite Advisors was denominated.
Are there any alternatives to the Receivers Proposal?
You should refer to section 5 of the Explanatory Memorandum for details. The Receivers have considered alternate approaches to the method of determining and making the distribution. The Receivers have developed the proposal set out in the Explanatory Memorandum having regard to (i) the legal principles which apply to such a distribution, and (ii) prioritising a timely and efficient return of funds to Beneficiaries.
What role will the Corporate Trustees play in the distribution process?
The Receivers have concerns making distributions to Corporate Trustees where (i) that Corporate Trustees is not independent of Brite Advisors, (ii) there is no documentation between the Corporate Trustee and Brite Advisors, or (iii) the Corporate Trustees have not engaged with or cooperated with the Receivers. However, the Receivers consider that the relationship between Beneficiaries and Corporate Trustees is a matter for them, and that Beneficiaries who have concerns about their Corporate Trustee should seek their own independent legal and financial advice and take steps to address that concern as appropriate.
Where a Beneficiary has a Corporate Trustee in respect of an account with Brite Advisors in relation to which their entitlement arises, the Receivers propose to make the distribution payment or transfer the asset, as applicable, to that Corporate Trustee.
The Receivers intend to seek an Order from the Court that upon a request from a Beneficiary, the Receivers will not distribute funds to that Beneficiary's Corporate Trustee, until they provide consent to do so. This will allow Beneficiaries time to arrange to change their Corporate Trustee should they wish to do so.
The Receivers also consider that before any funds are distributed to Corporate Trustees, additional documentation should be put in place between Brite Advisors and Corporate Trustees to clarify the terms of the trust arrangement and to govern the distribution to Corporate Trustees. The Receivers consider this is required for all Corporate Trustees, regardless of whether they had a Platform Agreement with Brite Advisors or not.
25. Are the Receivers considering the jurisdictional tax implications as part of their distribution strategy?
As a general rule, either the trustee or the beneficiaries are liable for tax on the income of a trust and a receiver or liquidator will be liable for the taxation liabilities of a trustee company to which they have been appointed.
If the Receivers are or will be liable for (i) any tax liabilities as a result of liquidating the Client AuM and making distributions to Corporate Trustees and Beneficiaries or (ii) liabilities arising from Brite Advisors’ historical operations, the Receivers will either retain an appropriate amount from the Client AuM to cover those liabilities or deduct the amount from distributions to Corporate Trustees or Beneficiaries.
The Receivers have engaged appropriate international tax and legal advisers, to advise on the potential taxation consequences of the proposed distribution including engaging with the Australian Taxation Office and intend to seek directions from the Court as and when required.
26. Consultation Period
You should read the Explanatory Memorandum carefully, consider how it impacts you, seek appropriate legal and financial advice, and provide any feedback you may wish to provide to the Receivers.
If there is anything which you do not understand you can write to the Receivers to ask questions, and the Receivers will provide clarity where they are able to.
Feedback must be provided in writing by 31 January 2025 to BriteAdvisorsDistributionFeedback@mcgrathnicol.com.
If you have no feedback, you do not need to do anything further at this time.
The Receivers will only consider feedback from Interested Parties, being the Corporate Trustees and the Beneficiaries, as well as any other person claiming to have a legal or equitable interest in the Client AuM.
27. Distribution Methodology Application
During and following the Consultation Period, the Receivers will consider all feedback on the proposed distribution provided by Corporate Trustees and Beneficiaries, as well as any other person claiming to have a legal or equitable interest in the Client AuM.
By Friday, 28 February 2025 the Receivers will file a further application with the Court for directions relating to the distribution of the Trust Assets (Distribution Methodology Application). The Distribution Methodology Application will be prepared with the benefit of the feedback provided during the Consultation Period and will incorporate any changes to the proposed distribution methodology that the Receivers consider appropriate or necessary.
By 3 March 2025, the Receivers will publish the Distribution Methodology Application by:
publishing it on the creditor website;
issuing it directly to all Corporate Trustees and Beneficiaries; and
issuing it directly to any other person who has or may have a legal or equitable interest in the Trust Assets.
Applications for leave to appear as an interested party.
Pursuant to the December 2024 Orders, at the time the Distribution Methodology Application is published, the Receivers will provide notice that any Corporate Trustee, Beneficiary or other person asserting an interest in the Trust Assets may apply to the Court in these proceedings for leave to be heard as an interested party on the Distribution Methodology Application.
By Friday, 14 March 2025 any applications for leave to be heard must be filed with the Court and served on the Receivers. On Friday, 21 March 2025 at 9am (AWST) / 11.30am (ACDT) there will be a 'first return date' hearing to commence the process of the Court’s assessment and ruling on any applications for leave to be heard that have been filed with the Court. The applications will not be heard substantively or determined at this hearing.
The Distribution Methodology Application hearing has not been listed by the Court at this stage and will not occur until any applications for leave to be heard have been determined by the Court. We will provide Corporate Trustees and Beneficiaries with a further update closer to the next hearing.
28. Access to Company Books and Records
The books and records of Brite Advisors do not accurately record the account position of individual Beneficiaries, and the Receivers do not currently have access to all the systems required to commence the process of verification of Beneficiaries' entitlements.
The Receivers are working to resolve this position and have been in continual communication, since appointment, with Brite Advisors respective information platforms, namely:
Interactive Brokers Australia (IBA)
The Receivers, together with the Interim Fund Manager have full access to all of Brite Advisors’ IBA accounts.
Salesforce
As Beneficiaries are aware, Brite Advisors’ custom built SalesForce platform and all relevant Beneficiary portfolio reporting data and documentation was inadvertently deleted by SalesForce in late April 2024. Since then, the Receivers have been working with SalesForce to rebuild the SalesForce org utilising back up data.
The SalesForce rebuild completed in early-September 2024. The Receivers are now working through the verification of the Beneficiary data to ensure that the data, documentation and SalesForce environment to be made available to all beneficiaries is accurate and functional.
29. Unauthorised correspondence to Beneficiaries and Trustees
The Receivers are also aware that some Beneficiaries have received correspondence from a party purporting to provide “Brite Client Help”.
The Receivers did not authorise this communication and have no affiliation with the group purporting to provide “Brite Client Help”, nor have the Receivers shared, or consented to the sharing of, any personal Beneficiary data.
We encourage you to carefully consider whether you should provide any personal information to the persons purporting to provide support as offered in the communication.
Please note, for the avoidance of doubt, any communications concerning the Client AuM issued to you by any persons other than the Receivers and their firm, McGrathNicol, are not authorised by the Receivers. If you receive any communications regarding the Client AuM and are unsure of whether it has been authorised by the Receivers, please contact us at briteadvisors@mcgrathnicol.com. We strongly caution Trustees and Beneficiaries against interacting with these third parties in respect of the Client AuM.
30. Payment of Advisory and Trustees’ Fees
The Receivers are of the view that the Advisory and/or Trustees’ fees are not trading expenses of Brite Advisors and therefore, they are unable to pay them while the current asset preservation orders remain in place.
31. Beneficiaries' concerns about their Trustees
The Receivers have received correspondence from several Beneficiaries indicating concern regarding their Trustee's independence or connection with Brite Group entities or associates.
The Receivers have reported their concerns in making distributions to Corporate Trustees where (i) that Corporate Trustees is not independent of Brite Advisors, (ii) there is no documentation between the Corporate Trustee and Brite Advisors, and (iii) the Corporate Trustees have not engaged with or cooperated with the Receivers. However, the Receivers consider that the relationship between Beneficiaries and Corporate Trustees is a matter for them, and that Beneficiaries who have concerns about their Corporate Trustee should seek their own independent legal and financial advice and take steps to address that concern as appropriate.
As part of the Receivers Distribution application, the Receivers intend to seek an Order from the Court that upon a request from a Beneficiary, the Receivers will not distribute funds to their Corporate Trustee, until they provide consent to do so. This will allow Beneficiaries time to arrange to change their Corporate Trustee should they wish to do so.
32. AFCA – Compensation Scheme of Last Resort (CSLR).
The Receivers are aware of the CSLR scheme and have been considering the availability of this scheme to the Beneficiaries of Brite Advisors. The eligibility criteria to access the CSLR scheme, and the interaction between administration of the CSLR scheme and the distribution of the Client AuM within the Federal Court Proceedings, are complex matters which the Receivers are currently working through with their legal advisers and the Australian regulators.
The Receivers intend to provide a fulsome update to beneficiaries as to the CSLR / AFCA issues in due course.