Plaintiffs v Defendants

For the plaintiffs in proceeding no S ECI 2025 01398

1. On 2 July 2025, I heard and granted an application for the appointment of provisional liquidators to the corporate defendants to this proceeding. John Lindholm and Emily Seeckts of KPMG were appointed as provisional liquidators (Provisional Liquidators). I gave oral reasons ex tempore for appointing the Provisional Liquidators at the hearing on that day, and subsequently published my reasons.[1]
2. On 6 August 2025, I heard and granted an application that: the corporate defendants be wound up on the just and equitable ground and in insolvency; the Provisional Liquidators be appointed as joint and several liquidators of the corporate defendants; the managed investment scheme operated by the first defendant, Lion Property Group Pty Ltd (LPG Head Co) and comprising the projects operated by the second and fifth to twenty-eighth defendants (the Group Scheme) be wound up; and that the Provisional Liquidators be appointed joint and several liquidators of the Group Scheme. Other consequential and related orders were also made.
3. At the time of granting the winding-up application on 6 August 2025, I indicated that I would publish my reasons for doing so as soon as practicable. These are my reasons.
4. The background to this proceeding, including description of the parties, the allegations made by the plaintiffs, and the procedural background up to 2 July 2025 is set out in the PL Reasons, and familiarity with the PL Reasons is assumed for the purposes of these reasons. Defined terms in these reasons have the same meaning as set out in the PL Reasons unless otherwise stated.

1. Prior to the appointment of the Provisional Liquidators, on 27 May 2025 I made orders by consent appointing Mr Lindholm and Matthew Hutton of McGrathNicol as Independent Accountant to prepare an expert report in respect of the financial position and affairs of the corporate defendants. The Independent Accountant was to investigate and report by 26 June 2025 to the parties and to the Court on the following matters:

(a) the identification of the assets and liabilities of the projects and the corporate defendants;

(b) opinion as to the solvency of the projects and the corporate defendants;

(c) the flow of funds within the projects and between the corporate defendants, including any payments to related parties or entities;

(d) an assessment of the current and future cashflow of the projects and the corporate defendants until completion of the projects; and

(e) any other information necessary to assess the financial position of the projects and the corporate defendants.

1. The orders made on 2 July 2025 appointing Mr Lindholm and Ms Seeckts as Provisional Liquidators of the corporate defendants included an order that the Provisional Liquidators provide a report to the Court on their progress within 30 days.
2. On 2 July 2025, the solicitors on the record for the defendants filed a notice that they had ceased to act for the defendants in the proceeding.
3. On 24 July 2025, the Provisional Liquidators provided the Court with their report (Confidential Report). The Provisional Liquidators requested that parts of the Confidential Report which they regarded as commercially sensitive and/or which could prejudice the outcome of the provisional liquidation or any subsequent proceeding or recovery action be kept confidential. To assist with the Court's consideration of that request, the Provisional Liquidators also provided a redacted version of the Confidential Report, which redacted those parts of the Confidential Report over which confidentiality was claimed (Redacted Report).
4. The proceeding was listed for a directions hearing on 25 July 2025. At that hearing, I informed the parties that the Court had received the Confidential Report and the Redacted Report. Satisfied that the request regarding confidentiality should be granted, I made orders pursuant to r 28A.06 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules) that the Confidential Report be placed on the Court file, marked as 'confidential' and not be able to be inspected other than by leave of the Court and that a copy of the Redacted Report be placed on the Court file. As requested by the Provisional Liquidators, I made orders that they may provide a copy of the Confidential Report (and the Redacted Report, if they wish) to ASIC. I also made orders that a copy of the Redacted Report be provided to the parties to the proceeding.
5. As the parties had not at that time seen the Redacted Report, I adjourned the hearing for one week, to 1 August 2025 (subsequently changed to 6 August 2025 due to the unexpected and sudden unavailability of the plaintiffs' counsel), to give the parties an opportunity to consider the Redacted Report and what steps should follow, including whether the corporate defendants should be wound up.
6. Prior to the hearing on 6 August 2025, the plaintiffs gave notice that at the hearing they would be pressing for orders that the corporate defendants and the Group Scheme be wound up. An outline of submissions from their counsel dated 5 August 2025, an affidavit of their solicitor, Peter Richards, sworn 5 August 2025 (Richards Affidavit), and proposed orders were filed and circulated by the plaintiffs.
7. At the hearing on 6 August 2025, counsel for the third and fourth defendants, John Sader and Garry Pesochinsky, appeared and sought an adjournment of the hearing. The application for an adjournment was opposed by the plaintiffs. For reasons given at the hearing, I refused the adjournment application.

Key findings in the Provisional Liquidators' report

1. I will now describe the key findings set out in the report from the Provisional Liquidators. I do so by reference to the Redacted Report, but I have had regard to the confidential matters as well, as set out in the Confidential Report. Obviously, I am not in a position to describe those confidential matters here, but it is important to note that I have had regard to those aspects of the report as well.

1. LPG Head Co is jointly and equally owned and operated by Mr Sader and Mr Pesochinsky. There are a number of other entities which appear to have provided services to LPG Head Co and which are owned by either Mr Sader and/or Mr Pesochinsky. LPG Head Co currently acts as the project manager of 18 property development projects located in Victoria and Queensland, which are in various stages of construction and completion, and it has previously acted as project manager to several now completed projects.
2. Each project is structured in its own special purpose vehicle (SPV), either in its own capacity or as trustee of a unit trust established for that purpose. The SPV engages LPG Head Co as its project and development manager through a formal management agreement, in exchange for a management fee.
3. In general terms, pursuant to investor agreements, investors contributed cash into a bank account in the name of the relevant SPV in exchange for shares in the SPV or units in the unit trust. Mr Sader and/or Mr Pesochinsky are the shareholders and directors of all of the SPVs. Primarily, Mr Sader and/or Mr Pesochinsky hold ordinary shares in each SPV and the investors hold Class A shares.
4. LPG Head Co, and the other corporate defendants, including the SPVs, are referred to as the Group.
5. Prior to the appointment of the Provisional Liquidators, it appears that the Group had ceased trading activities. LPG Head Co's office had been vacated, as had some other premises used by the Group. Construction seems to have halted on active projects in 2024. Five of the projects are partially built, six remain in the planning stage, and among the remaining SPVs one has reached completion and six have been sold prior to the appointment in both completed and partially completed states.

1. To fund the 18 project SPVs, the Group raised $122.2 million from approximately 600 investors since 2018. Typically, each SPV obtained its initial round of investor funding through that SPV, but occasionally a second round of funding was raised via a newly registered entity.
2. Throughout the life of the SPVs, investors were paid monthly distributions. Between 2018 and late 2024, it is estimated that $23.3 million was distributed to investors via the SPVs. The majority of these monthly distributions ceased in November 2024.
3. The Group appears to have adopted a consistent investment template across the majority of SPVs. Key investment terms were:

(a) investment funds were raised solely for the purpose of development and construction of the particular property;

(b) investors received Class A redeemable preference shares proportionate to their investment amount;

(c) there were to be fixed, non-cumulative monthly returns; and

(d) there was to be a return of capital/share buy-back at project completion.

1. Under the management agreements entered into between LPG Head Co and each SPV, LPG Head Co is responsible for raising capital, progressing planning approvals, appointing builders, managing sales, and acting as project and development manager.
2. LPG Head Co charges either a fixed fee or a variable fee linked to the net profit of the development. Based on a sample of management agreements reviewed, the management fee is payable from project sale proceeds after debt and other development costs are repaid but before investor funds are returned.

1. From balance sheets for LPG Head Co and each SPV, the Group has taken out approximately $62.9 million in secured debt. Many projects have multiple mortgagees, caveat holders and other secured interests, and a number of financiers have cross-collateralised their security.

1. The Provisional Liquidators are aware of the following actions initiated against the Group and its directors:

(a) Secured creditor actions:

(i) secured creditors have taken possession of the property in at least nine instances, and mortgagees in possession or agent for mortgagees in possession have been appointed to these projects;

(ii) seven properties were sold prior to the appointment, either by secured creditors or the Group;

(iii) a secured creditor appointed receivers over LPG Head Co and five of the SPVs, and over Elysian LandCo; and

(iv) there are two projects where the Provisional Liquidators have not yet been able to make contact with the relevant secured creditor to confirm whether they have taken possession.

(b) Investors' actions:

(i) investors have commenced this proceeding; and

(ii) an investor commenced a proceeding in the County Court making allegations against the Group and its directors.

(c) Winding-up applications:[2]

(i) the ATO has initiated a winding-up application against a related entity, Mane Property Clayfield Pty Ltd;

(ii) there is a winding-up application on foot against Full Circle Investment Group Pty Ltd (FCFS), a related entity of the Group.

1. The investment agreements and marketing materials (including information memoranda and the Group website) indicated that funds raised in the SPV would be used for the purposes of developing (acquiring and constructing) property in the specific SPV that they invested in. No mention appears to have been made of any intercompany loans between SPVs and LPG Head Co, or other related entities. Examples of materials historically available on the Group website were provided, many of which refer to matters such as 'Monies from one development/project are not used in other developments/ project', clearly setting the segregation of funds as an investor expectation, and there are references to investors being 'secured' against the projects.

1. In direct contravention of the investment agreements and marketing materials, the Group used LPG Head Co as a shared treasury function, transferring raised capital to LPG Head Co and then on to other SPVs.
2. By way of example:

(a) cash is raised by investors into the SPV;

(b) cash is sent to LPG Head Co (often on the same day), an inter-entity loan account is used to record the transaction. The bank balance of the SPV is generally kept at or around $0;

(c) as expenses are incurred by the SPV, funds are provided by LPG Head Co to the SPV to pay these expenses, thus reducing the LPG Head Co loan amount; and

(d) the net result of these movements has resulted in $26.3 million of related party loans owed by LPG Head Co to SPVs and $18.2 million owed by SPVs to LPG Head Co.

1. The Provisional Liquidators have not yet been able to conduct detailed tracing of investor funds due to time constraints and the complexity of the task. Initial amounts transferred from SPVs to LPG Head Co are traceable; however, subsequent payments by LPG Head Co, including trading expenses and funding to other SPVs, are rarely of round sum amounts and the specific identification method appears challenging.
2. The flow of funds in respect of three particular projects, Eden, Elysian and Eminence, are set out as examples.
3. An analysis of LPG Head Co's cash book was conducted, demonstrating that $106.2 million was received by LPG Head Co from the SPVs in provisional liquidation, of which $80 million was returned to SPVs subject to the provisional liquidation, resulting in a net cash receipt of $26.3 million. $19.9 million was paid to related entities, $10 million was used for trading expenses, and other payments have been recorded.
4. The related party debts recorded in LPG Head Co's general ledger and balance sheet do not reconcile to the cash outflows just referred to.
5. LPG Head Co's records indicate a number of instances where bad debts to related parties or completed projects have been written off. In respect of these completed developments, the Group's website historically recorded that investors in at least some of these completed projects were repaid in full. If the website is correct in that regard, the financial records suggest that the reported returns to investors may not have been funded entirely by the project's actual proceeds but were instead repaid from funds originating from LPG Head Co (likely raised through newer SPVs), which funds were then written off as bad debts.
6. According to the general ledgers of each project SPV, management and other fees totalling approximately $22.9 million appear to have been recorded prior to the sale of developed properties, which does not appear to align with the terms of the respective management agreements. The SPVs typically did not pay these with cash, rather they were booked against LPG Head Co or other related party loan accounts, thereby reducing the debt owed by LPG Head Co to the SPV. Although cash was not paid, the net effect of the reduced loan account is payment of those management fees.

1. The Group's financial position demonstrates an acute lack of liquidity. As at 20 June 2025, the SPVs and LPG Head Co collectively held less than $5,000 in cash. Unsecured creditors across the Group total $5.2 million, excluding related party creditors. Neither collectively nor individually do any entities within the Group have sufficient cash available to meet unsecured creditor obligations.
2. This clearly demonstrates the Group's inability to satisfy its financial obligations as they fall due, evidencing the insolvency of the Group as a whole and of its individual entities.
3. For the land-owning SPVs, the only significant assets are the land (or property if not vacant land) itself and certain intercompany receivables. These assets are not readily realisable in the short term. Further, the realisation of any value from the land or property assets would require additional expenditure and the SPVs lack sufficient cash to continue development on these properties or to market them in their current state. According to the directors, there is no prospect of sourcing additional funding, due to the loss of support from its financiers. The directors have also told the Provisional Liquidators that none of the related party entities outside the provisional liquidation have sufficient funds available to repay the amounts owed to the Group.
4. This lack of liquid and realisable assets further underscores the Group's inability to satisfy its debts as they are due and payable, such that the entities are insolvent from a cash flow perspective.
5. Not including SPVs where property has been sold but may be waiting for settlement, 11 SPVs currently hold property. Each has been analysed to determine whether its assets exceed its liabilities and whether there are sufficient net realisable assets available to provide a return of capital to investors. Four projects with the potential to generate sufficient funds to repay secured creditors in full and for a full return to unsecured trade creditors were identified. However, the treatment of investors plays a critical role in determining whether these SPVs have a surplus or a shortfall. If investors are classified as equity holders, there appears to be a surplus of assets; conversely, if they are unsecured creditors, there is a significant shortfall in these four SPVs. The classification of investors is complex due to apparent breaches of the investor agreements and allegations that investors were misled. This analysis also does not factor in the potential impact of secured creditors who have cross-collateralised their positions across multiple SPVs.
6. The Provisional Liquidators have concluded the following in respect of solvency:

(a) under the cash flow test, all SPVs are insolvent, as none have sufficient liquidity to meet their debts as they fall due;

(b) the balance test is less clear-cut. Most SPVs show shortfalls, but four projects may have the potential to return surplus funds under certain conditions, which outcome depends on the matters identified above.

1. The investigations of the Provisional Liquidators to date indicate that the Group was operating as a managed investment scheme. In particular:

(a) investors acquired shares and/or units in a unit trust. Contributions were made with the expectation of fixed annualised returns (eg, 12% per annum);

(b) while investor contributions were intended to be kept separate and the Group made various assertions that it was not operating a managed investment scheme and that investor funds were not being pooled, this was not so. Investors' contributions were aggregated and lent from the SPV entity to LPG Head Co and the flow of funds indicate that the funds did not all go back to or were not all used for the benefit of that SPV, which all effectively constituted pooling;

(c) the investors had no day-to-day control over the operation of the scheme, as they experienced difficulties in obtaining information from the directors which would be crucial for day-to-day control; builders have confirmed that their interactions with SPVs were with the companies and not the investors, and there is no evidence indicating that investors had control over the projects.

1. There are other matters regarding the allegation that the Group was operating a managed investment scheme; however, I cannot detail these as they are in the confidential section of the report.

1. There are other matters concerning other allegations in the Confidential Report which I am not in a position to describe, including matters concerning the conduct of the directors. Having reviewed that material, it is apparent that many of these matters require further investigation and which themselves justify the appointment of liquidators to the corporate defendants.
2. In the Redacted Report, the Provisional Liquidators identified some 12 additional entities of which Mr Sader and/or Mr Pesochinsky were directors, some of which had received funds from one or more of the corporate defendants for which there appeared to be no commercial grounds, and appeared on the LPG Head Co balance sheet as debtors.[3] At the hearing on 25 July 2025, Mr Sader and Mr Pesochinsky gave undertakings that they would not, before the next return date, deal with or cause the Additional Entities plus Mane Property Clayfield Pty Ltd to deal with the property and assets of those companies.

1. Relevantly, s 461(1)(k) of the Corporations Act 2001 (Cth) (the Act) provides that the Court may order the winding up of a company if it is of the opinion that it is just and equitable that the company be wound up. Section 462 of the Act sets out the persons who have standing to make an application for a winding up, which includes creditors. Hence the plaintiffs in this proceeding have standing to make the application.
2. Section 459B of the Act provides that where, on application under s 462,[4] the Court is satisfied that the company is insolvent, the Court may order that the company be wound up in insolvency.
3. Section 95A(1) of the Act provides that a person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. Section 95A(2) of the Act provides that a person who is not solvent is insolvent.
4. The legal onus of proving that a company is insolvent is on the person alleging insolvency.[5]
5. In Queensland Phosphate Pty Ltd v Korda [No 2],[6] the Court of Appeal summarised the principles for determining whether a company is insolvent as follows:

The applicable test as to insolvency was stated by Barwick CJ (with whom McTiernan and Windeyer JJ agreed) in Sandell v Porter as follows:

Insolvency is ... an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realisation by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.

The above test has been applied by this Court. It has been said that s 95A of the [Act] adopts a cash flow test of insolvency which focusses on the liquidity and viability of the business. The test focusses upon whether a company is 'able' to pay its debts rather than whether it is 'willing and able' to do so.

Whether a company is insolvent for the purposes of s 95A of the [Act] is a 'question of fact to be ascertained from a consideration of the company's financial position taken as a whole'. In considering the company's financial position as a whole, the court must have regard to commercial realities, which will be relevant in considering the resources available to the company to meet its liabilities as and when they fall due. Commercial realities include the nature of the company's business, the character of the debt and all of the circumstances present at the relevant time.

...

The test of insolvency in s 95A of the [Act] is to be applied 'without intrusion of hindsight'.[7]

1. Although s 95A of the Act adopts a cash flow test of insolvency rather than a balance sheet test, a deficiency of assets over liabilities in a company's balance sheet can be used as a non-conclusive indicator of insolvency.[8]
2. In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2),[9] Gordon J (as her Honour then was) summarised the principles regarding an application for the winding up of a company on the just and equitable ground in s 461(1)(k) of the Act. Her Honour stated:

The classes of conduct which justify the winding up of a company on the just and equitable ground are not closed, and each application will depend on the circumstances of the particular case. Nevertheless, it is possible to discern some guiding principles from the authorities.

It has long been established that a company may be wound up where there is a "justifiable lack of confidence in the conduct and management of the company's affairs" and thus a risk to the public interest that warrants protection. In Australian Securities and Investments Commission v ABC Fund Managers [2001] VSC 383; (2001) 39 ACSR 443 at [119], Warren J (as her Honour then was) set out three "general fundamental principles":

First, there needs to be a lack of confidence in the conduct and management of the affairs of the company. ... Second, in these types of circumstances it needs to be demonstrated that there is a risk to the public interest that warrants protection. Third, there is a reluctance on the part of the courts to wind up a solvent company.

In relation to the first, a lack of confidence may arise where, "after examining the entire conduct of the affairs of the company" the Court cannot have confidence in "the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company".

...

In relation to the second, a risk to the public interest may take several forms. For example, a winding up order may be necessary to ensure investor protection or where a company has not carried on its business candidly and in a straightforward manner with the public. Alternatively, it might be justified in order to prevent and condemn repeated breaches of the law. ...

In relation to the third, it has been said that "a stronger case might be required where the company was prosperous, or at least solvent". Solvency, however, is not a bar to the appointment of a liquidator on the just and equitable ground, particularly where there have been serious and ongoing breaches of the Act. [10]

1. There are numerous examples of different situations where courts have considered it just and equitable that a company be wound up, and it is not necessary for me to set all of these out here. In addition to the instances referred to in ASIC v ActiveSuper (No 2) as set out above, operating an unregistered managed investment scheme in contravention of s 601ED of the Act has been found to justify winding up the company on the just and equitable ground.[11]

1. The plaintiffs principally relied on the Richards Affidavit, the Redacted Report and the Confidential Report. They also relied on their written outline dated 5 August 2025 and the oral submissions from counsel at the hearing. To the extent necessary, they relied on affidavits filed earlier in the proceeding.
2. The plaintiffs submitted that the material in the Redacted Report bears out the concerns they have identified from the outset of this proceeding as to matters such as the pooling and inter-mingling of funds, the payment of management fees outside the terms of the relevant agreements, the misleading of investors, other breaches of the investment agreements, the extensive use of intercompany loans not revealed to investors either at the time of investing or afterwards, and investors in completed projects being repaid from funds raised in respect of newer projects via LPG Head Co who then writes that off as a bad debt.
3. The plaintiffs referred to one of the examples in the Redacted Report, referred to in general terms in paragraph 30 above. In respect of the Eden project, which the Provisional Liquidators' report states has had planning approved but construction has not been started, investors had contributed $11.3 million and secured creditors $2.08 million. Insofar as costs are concerned, the property acquisition costs were $3.9 million, monthly investor returns were $1.7 million, and other net expenses were $235,000. On that basis, there should be around $7.4 million of investor and secured creditor funds sitting in that project; however, the records indicate that $6.8 million was transferred to LPG Head Co and $595,000 to LPG Capital Advisory Pty Ltd (one of the Additional Entities). The plaintiffs submitted that how, why and on what basis, given the terms on which people invested, is not apparent. For this project, the remaining cash as per the general ledger is $133.
4. The plaintiffs submitted that all of these matters justify the corporate defendants being wound up on the just and equitable ground.[12] They say that these are all consistent with the allegations made by the plaintiffs in the proceeding and about which they have put on extensive affidavit material, none of which was ever responded to.
5. Further, the plaintiffs submitted that:

(a) in an email to the Provisional Liquidators sent at 11.58pm on 5 August 2025, Mr Sader stated that he and Mr Pesochinsky had taken other employment. This adds to the lack of confidence that the Court can have in the management of the corporate defendants, as the managers have 'departed the ship';

(b) the Court has had a 'ringside seat' for some six months now in terms of how the defendants have conducted this litigation. They repeatedly sought more time; more articulation of the plaintiffs' claims, to the point where they insisted on pleadings; and they have missed every deadline and extension to deadlines for filing affidavits and their defences. Having agreed to the appointment of the Independent Accountant, the defendants failed to provide all documents and to pay all of the fees, such that the Independent Accountant could not finish their report. The Court was informed on 2 July 2025 by the then senior counsel for the defendants that the final tranche of $40,000 in fees for the Independent Accountant had not been paid due to a lack of funds. The manner in which the defendants have conducted the litigation is a real and proximate illustration of the manner in which the incumbent management have conducted the affairs of the corporate defendants;

(c) none of the matters raised by the plaintiffs in this proceeding, many of which are now reflected in the Redacted Report, have ever been responded to or contested by way of affidavit evidence, such that the Court is left with the picture painted in the Redacted Report and nothing to gainsay it; and

(d) there is a need to protect the investors and the public, particularly since the Group's website has continued to promote the projects and the Group Scheme, and to seek investment, since this proceeding was commenced and after the corporate defendants were placed into provisional liquidation.

1. In addition, the plaintiffs referred to the matters in the Redacted Report as to the insolvency of the corporate defendants and submitted that these matters justify the corporate defendants being wound up in insolvency. Further, the Provisional Liquidators stated in an email on 4 August 2025 to Mr Sader and Mr Pesochinsky in response to their request for an adjournment of the hearing scheduled for 6 August 2025 that the Provisional Liquidators opposed such a course. In that email, the Provisional Liquidators stated that:

As outlined in both the Provisional Liquidator's report and our letter of 29 July 2025, our investigations indicate that the Group is insolvent. Specifically:

• The Group is entirely without funds;

• The majority of the developments have been sold or secured lenders have taken possession of them; and

• The Group has lost the support of both its investors and financiers.

Given these findings, we consider it highly unlikely for the Group's financial position to improve or for solvency to be restored. Our position remains that the Group should be wound up to prevent any risk of further liabilities being incurred and to preserve any remaining value.

1. The plaintiffs acknowledged that insolvency was not a ground upon which they had commenced the proceeding seeking the winding up of the corporate defendants, but submitted that s 459B of the Act would allow the corporate defendants to be wound up on that ground where there is an application under s 462 for winding up if the Court was satisfied that the corporate defendants were insolvent.
2. The plaintiffs submitted, in conclusion, that the Court can be satisfied that:

(a) each of the corporate defendants are insolvent;

(b) there is a complete lack of confidence in the management of the corporate defendants;

(c) there is an unacceptable risk to the public; and

(d) these matters also justify winding up the Group Scheme.

1. When appointing Mr Lindholm and Ms Seeckts as provisional liquidators on 2 July 2025, I stated that the following matters justified that course:

(a) the Independent Accountant's preliminary view established a number of matters that were concerning:

(i) the corporate defendants were currently insolvent and that this was unlikely to change;

(ii) payments from investors into the SPVs had been verified, but not all payments coming out had been able to be verified, but a sizeable amount to related entities had been identified;

(iii) money from each of the projects had been inter-mingled;

(iv) there was no cash at bank;

(v) a number of projects are incomplete or construction has not commenced, and significant funds would be required to be able to sell them at a profit;

(b) the corporate defendants may be insolvent; and

(c) there was concern as to how the corporate defendants were being managed.[13]

1. By the time of the hearing on 6 August 2025, I had the benefit of the report from the Provisional Liquidators, both the confidential and the redacted versions.
2. In my view, the Redacted Report, together with the Confidential Report, confirms the concerns identified as the basis for appointing provisional liquidators and more than amply demonstrates that the appropriate course for the Court to take is to wind up the corporate defendants on both the just and equitable ground and on the grounds of insolvency. I have set out the key aspects of the Redacted Report earlier in these reasons, and these matters compel the conclusion that the corporate defendants ought be wound up.

Winding up on the just and equitable ground

1. All three of the matters identified by Warren J in ASIC v ABC Fund Managers,[14] as set out at paragraph 51 above, are satisfied in this case, such that it is just and equitable that the corporate defendants are wound up.
2. In my view, there is a lack of confidence in the conduct and management of the affairs of the SPVs and of the Group. In particular:

(a) the record keeping in respect of the SPVs and of the Group as a whole is deficient, as the Provisional Liquidators have been unable to obtain a full and accurate picture of their financial circumstances. By way of example, related party debts recorded in the general ledger and balance sheet do not reconcile to the cash outflows evident from LPG Head Co's cash book;

(b) the Group has ceased trading, and the senior executives have sought employment elsewhere, such that there is no evidence that any of the Group's management are taking care of the affairs of the corporate defendants;

(c) there is widespread action by secured creditors, such that the corporate defendants are no longer in control of a number of the properties;

(d) funds have flowed between SPVs and LPG Head Co in a number of ways which are inconsistent with the relevant investor agreements and management agreements, leading to a real and appreciable concern that Group entities have received funds to which they are not entitled. Further, as a consequence of the insolvency of the Group (see below), there is serious doubt as to whether any effective redress can be obtained from Group entities who have received funds to which they are not entitled;

(e) further, the flow of funds from SPVs to LPG Head Co and then out of LPG Head Co to related entities which at this point are not subject to provisional liquidation raises real concerns as to the legitimacy of those transactions;

(f) some completed projects have been described by the Group as having resulted in investors being fully repaid; however, LPG Head Co recorded debts owing from some of those projects which were written off as bad debts, suggesting that the return to investors from older completed projects may have been funded from newer projects; and

(g) management fees have been paid by SPVs to LPG Head Co outside the terms of the management agreements.

1. Second, there is a risk to the public interest which warrants protection, due to this evident lack of confidence in the management of the Group's affairs. In this regard, I accept the plaintiffs' submissions as set out in paragraphs 54 to 57 above. In particular:

(a) the Court has no confidence that the Group would be managed in a way which alleviated these concerns. Mr Sader and Mr Pesochinsky, in their communications with the Provisional Liquidators, have blamed the Group's difficulties on everything but their management of the Group. According to Mr Sader's email to Ms Seeckts at 11.58pm on 5 August 2025, the 'challenges' faced by the Group were primarily caused by external factors beyond the Group's control, including investor-driven legal actions, negative publicity and underhanded tactics by non-investors causing severe reputational damage. According to Mr Sader, these actions disrupted funding commitments and deterred potential investors. He contends that absent these external disruptions, the Group's projects were viable and would have preserved investor capital and maintained solvency. I give no weight at all to these contentions. Mr Sader and Mr Pesochinsky had ample opportunity to put evidence (as opposed to unsworn assertions in correspondence) before the Court, indeed they had been ordered to do so on several occasions, but they did not. In addition, the allegations made against them and the Group, as contained in the affidavits filed on behalf of the plaintiffs in this proceeding and as set out in the amended statement of claim, were detailed and were never, despite Court orders for the defendants to file a defence, the subject of a defence in the proceeding. Making sweeping assertions in correspondence, while ignoring Court orders for the filing of defences and affidavits, leads me to believe that either Mr Sader and Mr Pesochinsky have no insight into the difficulties facing the Group (including their causes) or that they have deliberately avoided facing them in this proceeding. Either way, I can have no confidence that the Group will be managed appropriately if the provisional liquidation ends without the corporate defendants being wound up;

(b) given the evident concerns as to the use of investors' funds, including whether they have been used in a manner contrary to the investment agreements and the management agreements, and whether the SPVs obligations to investors are able to be met, there is a serious concern that the Group would continue to be operated in the manner it has been. This would not only prejudice current investors, but it would mean that new investors may suffer the same fate. The defendants' failure to adequately address, by filing defences and evidence, the matters raised by the plaintiffs in this proceeding, many of which have found support in the Redacted Report, leads me to conclude that the public interest is best served by the corporate defendants being wound up. This is necessary to ensure protection of investors, current and future. It is also necessary due to the lack of public candour associated with the way the Group carried on its business; and

(c) the Group's website continued to promote investment in the projects after the corporate defendants were placed in provisional liquidation.

1. Third, a court's reluctance to wind up a solvent company is no barrier here, since the only available conclusion to the Court is that the SPVs individually and the Group collectively are insolvent. I address this in the next section.
2. As a further justification for winding up on just and equitable grounds, the conclusion which I have reached below, that the Group Scheme is an unregistered managed investment scheme operated in contravention of the Act, is another basis to wind up the corporate defendants.[15] It is just and equitable to wind up the corporate defendants who were operating an unregistered managed investment scheme.

1. Although the winding-up application was not originally made on the grounds of insolvency, s 459B of the Act means that a company can be wound up in insolvency if the application is made on some other basis and the Court is satisfied that the company is insolvent.
2. The Redacted Report is extremely clear in its assessment of solvency and there is no evidence at all to contradict that.
3. There is no need for me to set out the evidence again here. It is set out in sufficient detail above, where I describe the contents of the Redacted Report.
4. That evidence overwhelmingly supports the conclusion that the corporate defendants are insolvent. None have sufficient cash or liquid assets to meet their debts as and when they fall due. Viewed as the Group, rather than as individual companies, the conclusion is the same. That there are four SPVs who may, depending on how certain matters such as cross-collateralisation and classification of liabilities to investors, be balance sheet solvent does not change the analysis or this result. It is the cash flow test for solvency which must be satisfied, and in this instance, the individual corporate defendants and the Group as a whole cannot meet that test.
5. Accordingly, the corporate defendants should be wound up in insolvency.

1. To wind up a managed investment scheme pursuant to s 601EE of the Act, the Court must be satisfied as to the following matters:

(a) the scheme is a managed investment scheme within the meaning of s 9 of the Act;

(b) the managed investment scheme is required to be registered under s 601ED of the Act;

(c) the managed investment scheme was not so registered; and

(d) the managed investment scheme was being operated in contravention of that requirement.

1. Pursuant to s 601EE(1) of the Act, a member of the scheme has standing to make an application for the winding up of the scheme.
2. The definition of a managed investment scheme is set out in s 9 of the Act, which provides that it has the following features:

(i) people contribute money or money's worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not);

(ii) any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders);

(iii) the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions).

1. As noted by Black J in Stewart v Spicer Thoroughbreds Pty Ltd,[16] many cases have addressed the scope of this definition and its elements, which can be summarised as follows:

The definition is directed to a scheme that has specified features, namely (1) the act of contribution of money or money's worth by several persons; (2) the accruing for those persons in return of certain rights to benefits produced by the scheme; (3) pooling of the contributions or other use of them in a common enterprise; (4) an objective or expectation of accrual of benefits to persons for the time being holding the rights generated by the contributions; and (5) absence of day to day control of the operation of the scheme by those persons.[17]

1. Subject to certain exceptions which are not relevant here, s 601ED(1) of the Act provides that a managed investment scheme must be registered if:

(a) it has more than 20 members; or

(b) it was promoted by a person, or an associate of a person, who was, when the scheme was promoted, in the business of promoting managed investment schemes; or

(c) a determination under subsection (3) is in force in relation to the scheme and the total number of members of all of the schemes to which the determination relates exceeds 20.

1. Subsection (c) does not apply here.
2. Section 601ED(5) of the Act provides that a person must not operate in this jurisdiction a managed investment scheme that is required to be registered unless the scheme is so registered.
3. There are exceptions or exemptions to the registration requirement, which I do not need to set out here. The onus is on the person contending that exceptions or exemptions apply in a given case to establish that the conditions giving rise to such exceptions or exemptions exist.[18]
4. As noted in Stewart v Spicer,[19] the concept of 'the business of promoting managed investment schemes' was considered in Australian Securities and Investments Commission v PE Capital Funds Management Ltd (external admins apptd).[20] In that case, Cheeseman J found that an issuer was in the business of promoting managed investment schemes where there was evidence of active promotion of the scheme, undertaken for the purpose of profit-making and repeated over a period of years in relation to multiple schemes.[21]

1. The plaintiffs relied on the materials referred to in paragraph 53 above. They submitted that the Group Scheme should be wound up pursuant to s 601EE(1) of the Act, on the basis that it is a managed investment scheme within the meaning of s 9, which is required to be registered under s 601EB(1) due to s 601ED(1), but is not so registered and is being operated in contravention of s&#1[22]601ED(5).22 They also submitted that[23]_SIC v Askk_23 was an example of the court winding up the corporate defendant which had operated an unregistered managed investment scheme in contravention of s 601ED(5) of the Act as well as winding up the scheme itself, and that there was utility in the court doing so.
2. The plaintiffs submitted that the Group Scheme is a managed investment scheme within the meaning of s 9 of the Act as:

(a) investors contributed funds in return for a right, being shares in the SPV or units in the unit trust, through which they had rights to a return;

(b) the contributions were pooled or used in the common enterprise, as investors' money goes into a pool, ostensibly for an individual SPV but actually to be used by the Group via the shared treasury function conducted by LPG Head Co, to produce financial benefits through the development of the different projects; and

(c) all of the evidence establishes that the investors did not have day-to-day control of the projects.

1. The Group Scheme was required to be registered, as it satisfies both (a) and (b) of s 601ED(1) of the Act, even though it only need satisfy one of these for the registration requirement to be triggered. In this case, there are clearly more than 20 members, whether that is looked at for an individual SPV or across the Group, where the Provisional Liquidators identified approximately 600 investors. Sub-paragraph (b) would apply anyway, as the Group Scheme was promoted by a person or an associate of a person who was in the business of promoting managed investment schemes, as is apparent from the website and Facebook advertisements where LPG Head Co was promoting the projects, the investment model, and the scheme. LPG Head Co was in the business of promoting these projects, that promotion was not some kind of incidental activity in the course of running the Group.
2. The plaintiffs submitted that it had never been suggested in this case that any of the exceptions or exemptions to the registration requirement applied here. It is also apparent that the Group Scheme, or any individual scheme for each SPV, was not registered.
3. Therefore, s 601ED(5) has been contravened because LPG Head Co has been operating a managed investment scheme, being the Group Scheme, which was required to be registered and was not so registered.
4. The plaintiffs also relied on their submissions in respect of the winding up of the corporate defendants.

1. I am satisfied that each of the four matters referred to in paragraph 74 above have been met in respect of the Group Scheme. Therefore, I made orders that the Group Scheme be wound up, and I appointed the Provisional Liquidators to be the liquidators of the Group Scheme.
2. The Group Scheme meets the definition of a managed investment scheme, as:

(a) investors contributed money to acquire rights (in this instance, shares in a SPV or units in a unit trust operated by a SPV) which carried benefits via monthly distributions and return of capital;

(b) the investors' contributions were pooled, within each SPV (as investors expected) and within the Group as a whole (which investors did not expect), so as to be used in the common enterprise of the projects and to produce benefits to investors; and

(c) investors did not have day-to-day control of the projects. The evidence firmly indicates that it was the directors and other persons in the management team of LPG Head Co who had day-to-day control of the projects.

1. The Group Scheme, being a managed investment scheme, was required to be registered under the Act. It clearly had more than 20 members, since the Provisional Liquidators have identified some 600 or so investors. This is enough to require the Group Scheme to be registered. However, it also meets an alternative criterion for registration, in that the Group Scheme was promoted by LPG Head Co, which was clearly in the business of promoting managed investment schemes. The affidavit evidence filed in this proceeding by the plaintiffs includes examples of information memoranda and marketing materials, including the Group's website and social media advertising, where LPG Head Co was promoting the projects and soliciting investments in those projects. As the plaintiffs submit, there is no evidence that any of the exceptions or exemptions to the requirement for registration apply here. The onus to establish an exception or exemption lies with the person contending that one applies. Here, no such evidence has been adduced.
2. The Group Scheme was not registered in accordance with the Act.
3. As a consequence, LPG Head Co, with the involvement of the other corporate defendants, operated the Group Scheme in contravention of the requirement that it be registered.
4. This being the case, the Court has power to wind up the Group Scheme and I was satisfied that it was appropriate to do so. The matters identified above as to why it is in the public interest that the corporate defendants be wound up on the just and equitable ground, in particular the need to protect investors, more than amply justify the winding up of the Group Scheme.

Temporary injunction to restrain the third and fourth defendants from dealing with the assets or property of the Additional Entities or causing the Additional Entities to do so

1. At the hearing on 6 August 2025, the plaintiffs sought orders:

(a) that the orders relating to the Group Scheme include projects operated by the Additional Entities; alternatively

(b) temporarily restraining the third and fourth defendants from dealing with or causing the Additional Entities to deal with the property and assets of the Additional Entities.

1. The plaintiffs referred to the undertakings given by Mr Sader and Mr Pesochinsky on 25 July 2025 and submitted that this should be continued by court order to the same effect, so that the status quo could be preserved until the Provisional Liquidators had had an opportunity to investigate the matters further and make an application to wind up the Additional Entities, if so advised.
2. The plaintiffs submitted that as they understood it, the Confidential Report established the basis for possible claims against the Additional Entities, and so there exists a serious question to be tried. They also submitted that the balance of convenience clearly favours the granting of an injunction in circumstances where the companies are 'just holding companies' as Mr Pesochinsky asserted at the last hearing, and the Provisional Liquidators should have an opportunity to further investigate the position before assets are dealt with or dissipated. The plaintiffs submitted that the injunction should be granted, notwithstanding that an undertaking as to damages is not proposed to be given. The plaintiffs submitted that no prejudice had been identified in respect of the proposed injunction.
3. I declined to grant the relief referred to in paragraph 95(a) above, but I did grant the temporary injunctions sought in paragraph 95(b) above. In my view, the material in the Redacted Report and the Confidential Report provided a sufficient basis to justify a temporary injunction, so as to enable the Provisional Liquidators to undertake further investigations and initiate any action they considered appropriate, while preserving any assets of the Additional Entities so that they were available for the Provisional Liquidators to pursue. However, that material was insufficient to satisfy me at this point that the Additional Entities should be considered as part of the Group Scheme.
4. Accordingly, I granted an injunction in the form of paragraph 95(b) above until 6 October 2025. I did not require an undertaking as to damages to be given. In my view, the circumstances of this case are exceptional and justify that course, by reference to the discussion in Environment East Gippsland Inc v VicFor[24]ts (No 2).24

1. The Redacted Report and the Confidential Report refer to items which the Provisional Liquidators had requested be delivered up to them by Mr Sader and Mr Pesochinsky, such as hard drives and/or computer servers, and which had not been so delivered up. The orders I made on 25 July 2025 included an order for delivery up by Mr Sader and Mr Pesochinsky of any hard drives and/or servers in their possession or the possession of the other defendants.
2. Exhibited to the Richards Affidavit is correspondence between the Provisional Liquidators and Mr Sader and Mr Pesochinsky after the orders had been made on 25 July 2025 regarding, inter alia, the hard drives and servers. The Provisional Liquidators remain concerned that they have still not been provided with these and have not accepted the explanations given to them by Mr Sader and Mr Pesochinsky.
3. Accordingly, on 8 August 2025, the plaintiffs sought orders that Mr Sader and Mr Pesochinsky each file and serve affidavits in which, to the best of his knowledge having made all reasonable inquiries, he:

(a) identifies each server, hard drive and email account used in connection with the business of the corporate defendants (or any of them);

(b) states in respect of each such server and hard drive, its current location and the person in possession of it; and

(c) states in respect of each such email account, the password for and means of access to and/or retrieval of it.

1. Given the evidence before the Court, I was satisfied that it was appropriate to make those orders. Mr Sader and Mr Pesochinsky should go on oath as to these matters, so that the Provisional Liquidators can fulfil their roles.
2. I also reserved liberty to apply to the parties and the Provisional Liquidators, so that any applications could be made. It is important that the parties and the now liquidators have access to the Court. This is particularly so given the making of the temporary injunction referred to above.
3. Save as otherwise ordered, the plaintiffs' costs of the proceeding as against the corporate defendants, insofar as the costs of the winding-up application are concerned, were ordered to be taxed and reimbursed out of the property of the corporate defendants in accordance with s 466(2) of the Act.
4. At the request of the Provisional Liquidators, I also made orders that they may provide a copy of the Confidential Report to Victoria Police who had approached them for it (and the Redacted Report, if they wished).

MARK BERNARD in his own capacity and as trustee of the WITSENKADE SUPER FUND

SHARON ANNE DANZIG in her own capacity and as trustee of the JOHN CRESSWELL GREEN TESTAMENTARY DISCRETIONARY TRUST

(ACN 605 339 268) as trustee for the C&F BARBAYANNIS SUPER FUND

(ACN 619 651 268) as trustee for the GALLIOTT SUPERANNUATION FUND

CAMBREE PTY LTD (ACN 003 484 464) as trustee for the CAMBREE PTY LTD SUPERANNUATION FUND

MATTHEW ROBERT SHEPPARD in his own capacity and as trustee for ANNES TRUST and MATTSSUPER

SAVAGE FAMILY SUPER PTY LTD as trustee for the SAVAGE FAMILY SUPPERANNUATION FUND

TAX GURUS ACCOUNTANTS & ADVISORS PTY LTD (ACN 150 973 827) as trustee for the MILAN FAMILY TRUST

SUPER MILAN PTY LTD (ACN 638 471 511) as trustee for the MILAN SUPERANNUATION FUND

SUNRISE TV PTY LTD (ACN 004 372 909) as trustee for the SUNRISE TELEVISION SUPERANNUATION FUND

SSSD PTY LTD (ACN 101 182 503) as trustee for the HILLSTAD INVESTMENTS TRUST

BRADY DAW in his own capacity and as trustee for the BRADY DAW SUPER FUND

KAREN K NIXON PTY LTD (ACN 152 226 223) as trustee for the KAREN K NIXON SUPERANNUATION FUND

(ACN 623 039 583) atf the EMINENCE CAMBERWELL UNIT TRUST

[1] See Re Lion Property Group Pty Ltd [2025] VSC 401 (PL Reasons).

[2] In addition, the Court was informed via the Richards Affidavit that there was an extant application in the Federal Court by the ATO to wind up LPG Head Co. I am also aware of an application to wind up one of the corporate defendants, One Adams St Capital Pty Ltd, the tenth defendant, as that application has been allocated to me and was listed for hearing at the same time as this proceeding on 25 July 2025 and 6 August 2025.

[3] These were One Degree Odessa Pty Ltd, LPG Money Pty Ltd, LPG Property Developments Pty Ltd, Lion Private Equity Pty Ltd, Mane Property Management Clayfield Pty Ltd, 111 Ormond Esplanade Pty Ltd, 45A Ormond Esplanade Pty Ltd, LPG Capital Advisory Pty Ltd, LPG Diversified Constructions Pty Ltd, 187 Beaconsfield Parade Pty Ltd, and Sader & Brunton Custodial Pty Ltd (Additional Entities). In addition to these 11 companies, another company, Mane Property Clayfield Pty Ltd was also identified; however, by the time the hearing on 6 August 2025 was coming to a conclusion, that company had been wound up in insolvency by the Federal Court of Australia earlier in the morning, and Ms Seeckts and Mr Lindholm were appointed by that Court as liquidators. Hence it was excluded from the list of Additional Entities insofar as the orders made by me on 6 August 2025 are concerned.

[4] Other sections of the Act are also mentioned there, but are not presently relevant.

[5] Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72; (2017) 318 FLR 58, 86 [142] (Beazley P, Gleeson JA and Emmett AJA; [2017] NSWCA 72. Cited in Quin v Vlahos [2021] VSCA 205, [42] (Kyrou, Kennedy and Walker JJA) (Quin v Vlahos).

[6] [2019] VSCA 215 (Queensland Phosphate).

[7] Queensland Phosphate, [97]-[99], [105] (Kyrou, McLeish and Niall JJA) (citations omitted).

[8] Quick v Stoland Pty Ltd [1998] FCA 1200; (1998) 87 FCR 371, 380 (Emmett J); [1998] FCA 1200. Cited in Quin v Vlahos, [45].

[9] [2013] FCA 234 (ASIC v ActiveSuper (No 2)).

[10] ASIC v ActiveSuper (No 2), [19]-[20], [21], [23]-[24] (Gordon J) (citations omitted).

[11] As was the case in ASIC v Letten (No 15) [2011] FCA 1268 (Gordon J) (Letten).

[12] In this regard, the plaintiffs relied on ASIC v Falcon Capital Limited [2025] FCA 359, [21] (Moshinsky J); ASIC v ABC Fund Managers [2001] VSC 383, [119] (Warren J); Galanopoulos v Moustafa [2010] VSC 380, [32] (Sifris J); ASIC v ActiveSuper (No 2), [20]-[24]; ASIC v International Unity Insurance Pty Ltd [2004] FCA 1059, [135]-[139] (Lander J).

[13] PL Reasons, [27]-[30], [34]-[36].

[14] [2001] VSC 383; (2001) 39 ACSR 443, [119].

[16] [2022] NSWSC 558 (Stewart v Spicer).

[17] Stewart v Spicer, [17] (citations omitted).

[20] [2022] FCA 76 (ASIC v PE Capital).

[21] ASIC v PE Capital, [58]-[60].

[22] In this regard, the plaintiffs relied on ASIC v Chase Capital Management Pty Ltd [2001] WASC 27, [52]‑[58], [93]-[94] (Owen J); ASIC v Letten [2010] FCA 140 (Gordon J); ASIC v Askk Investment Group Pty Ltd [2020] FCA 1150; Stewart v Spicer, [16]-[19].

[23] [2020] FCA 1150.

[24] [2009] VSC 421, [16]-[21] (Forrest J).