ACFI Creditors Support Group

Avondale College Foundation Investments Creditors


here ...



1.  When is it anticipated that the administration will end and the final dividend  be paid?

Originally the final asset realisations are scheduled to occur at the end of 2014. However a claim against Lehman Brothers could result in a further 1.2-2.4c in the dollar. This is based on the Lehmans Scheme documentation and could change. PPB believes it is in the best interests of the creditors to continue to participate in this process and extend the administration into 2015 in order to pursue this claim.  


2.  What is the expected final return?

PPB are projecting a total payment of around 70 cents in the dollar.


3. Did any directors, former directors or relatives of ACF or ACFI have loans at the time of the collapse?  Have any of these loans not been repaid or been reduced and by how much and why? If it is the case that any directors or former directors (or related entities, family members) had loans on what basis were these loans given, what security was required?  Were the conditions outlined in the Investment Guidelines of the Fund?  

Of the director and former director related loans, one set (relating to three directors/former directors) has not been repaid in full.  The Committee is aware of the details of this, settlement of which was confidential and full details cannot be disclosed to the general body of creditors.  The loss suffered was in the region of $1.5m. There are other direct loans made between ACFI and other entities/individuals for business and property which have been reduced/forgiven in part.  However, details of these loans, why they were made and if there were any links with directors is not available due to privacy laws.


4, I refer to question 3.  If a director and former director had loans and it has not been repaid in full and the loss suffered was in the region of $1.5m, why are they not being required to pay their loans.  Surely they were secured to something that can be realised for cash. Unfortunately, the guarantees and securities put up for these loans did not match the amount owing.  In addition, should guarantors not have Australian assets in their name and/or be residents overseas, it is not possible to pursue them legally.


Does this mean that Securites were put up for loans and that the value of these were not checked against the loans?  

It would appear this could be the case or that they were incorrectly valued or the value decreased over time (and there was not system / procedure for checking this).

Does it mean that securities for the loans were in a third party's name?   Yes

How does this work?   It didn't!

Is there a paper trail of where these securities and guarantors were checked out against the loans?  Not that PPB nor others can have access to.  It would require former employees/directors to come forward with the information.

Surely someone at ACFI would have been responsible for approving the loan AFTER these guarantors' credentials were CHECKED?   As above, the creditors and PPB do not have access to this information - we would need a former employees/directors to enlighten us.

Were these loans forgiven, NOT REPAID in full?    Is this a legal way to transact a business?  Unfortunately for us, it appears that there are legal ways to not have to pay back your loan in full.


5.  What has happened to the 'staff' of ACFI? Surely they would have been aware of what was occuring during 2008. Can members of the ACFI Board be held accountable for not notifying members of problems which were happening early in 2008?  

Other than the directors, there was only 1 staff member. The question of pursuing Directors was explored in the Administrators report to creditors of 24 November 2008. This is not within the brief of the administrators. It should be noted that individual employees may been responsible for the day to day running of ACFI but may not have been involved in deciding how funds were invested.


6.  Apart from the original investments such as Rubicon which caused ACFI to collapse, have some of the other remaining investments gone sour since PPB took over?

There has been further losses suffered from a deterioration in some of the investments. PPB are informing the Committee as and when any significant matters arise in this regard.


7.  Is PPB using up more than expected in administration costs?

PPB Advisory’s fees for the Deed Administration will total over $1 million well within the industry standard for the work they have done.  In February 2013, PPB generously agreed to limit the fees to a maximum amount up to the end of administration.  This is a saving for creditors and a generous gesture on the part of PPB as it is not normal practice to reduce rates or offer fixed fees.  


8.  Is it true that someone let the cat out of the bag and a large depositor emptied their account just prior to ACFI going into receivership?

PPB has investigated this and they believe there is no evidence that this occurred.


9.  In the light of the Rubicon investments (with the subsequent  9 million dollar loss), has any investigation been made and/or action been taken against ACF staff or any other  persons for misleading promotion/advertising /assurance? While the SPD tries to seperate itself from this event it is rather ironic that the email address given at the time was [email protected]

Many creditors had advised that they felt the fund was either underwritten by the church or part of the SPD and believed the advertisment: “Protect Your Cash With ACF Investments” regularly posted in The Record. They have pointed out that ACF was listed as a "Supporting Ministry" in the Adventist Yearbook. It was also allowed to place advertising in the Record and other church publications (where there are strict policies). SPD and Avondale senior staff were invited to annual meetings and sent all annual reports for each division of ACF. ACFI flyers were given out from the Avondale College stand at camp meetings all around Australia and at the times, the contact person was in fact, an employee of Avondale. In addition, ACF and ACFI used Avondale college domain names for their related websites and email addresses. ACFI staff changes were actually posted in the Avondale Alumini publication along with Avondale staff members. The position of ACFI chairman was advertised in the Record twice during October 2008 in a box entitled “Positions Vacant” & “Adventist Employment” with church logo along with other church employment positions Also the use of "Avondale College" in their name indicated a close tie/approval. For these and other reasons many creditors believed that this was not independent of the SPD and  that it was in some way overseen and secured by the church organisation.  


With regard to pursuing ACF staff and directors, PPB have advised that their job as administator under the Deed does not include pursuing legal claims or investigating wrongdoing on behalf of creditors.  In fact, as their job is to realise the assets and distribute to creditors, it not legally possible for them to undertake such action.  


10. There was a plant nursery in the North West Sydney area that was connected in some way to the ACF.  Is this property to be sold and the funds distributed to the creditors?

The Avondale Nursery belongs to Avondale Foundation and is a guarantee for ACFI.  While the land that it operated from was originally purchased by the Nursery, it was transferred to ACFI ownership (some years before the DOCA) as part of a debt forgiveness arrangement.  For more than a year, there was an attempt to sell both the land and business as a going concern.  When this was unsuccessful, the land was put on the market and sold.  The Nursery was wound up and the assets sold and the proceeds paid into the ACFI fund.


11.  I was told in February 2008 that ACF was in no trouble as they were not exposed to any investments in the United States.   I have since been advised that at the time of my phone call,  ACF did, in fact have people looking into their viablility to keep trading at that very time.    

PPB will not provide complete details of advice given in a meeting with ACFI in February 2008 as they believe it may be a conflict of interest with their role as administrator and breech privacy laws.  However, we have a good idea of the purpose of the meeting and some basic details have been provided.  As ACFI had a sizeable investment in Rubicon (with investments in the US, Japan and Europe property markets), it would have been experiencing difficulty in February 2008 as Rubicon investments had a major slide in value at the end of 2007.  They brought in PPB to provide advice in February 2008. We do not have access to complete details of the advice or the action that ACFI took.  One known piece of advice was that ACFI should approach the SPD for assistance but the SPD has advised that they had no knowledge of the situation and were not approaced at that time.   Regular ACFI advertisements  that had been running in the Record stopped permanently after 1 March 2008 a short time after the meeting between ACFI and PPB.  The fund was technically insolvent by 31 July 2008.

Questions & Answers

We have received a number of questions from creditors eager to know what is happening to their funds.  We are sure than many creditors would like to have the same information so we will post these questions on this site.  Please note that the answers provided are by members of the support group after seeking clarication from PPB or the Creditors Committee.