The founders of collapsed financial planning group Storm Financial received a special $2 million dividend just weeks before the company was placed in administration.
A report in The Age says Storm’s new receiver Rob Hutson from KordaMentha confirmed the $2 million payment to founders Emmanuel and Julie Cassimatis was made on 15 December.
At the same time, Storm made payments totalling $650,000 to four clients of the group.
Hutson, who was appointed as receiver by Storm’s biggest creditor Commonwealth Bank late last week, told the newspaper that he is in the processing of assessing Storm’s financial position, but said the special dividend could put payments to sacked Storm staff in doubt.
“We have concerns about whether employee interests will be protected because a substantial amount of cash was taken out of the business in non-trading payments. We are currently taking legal advice to recover these funds for the benefit of creditors.”
News of the payments is likely to outrage many Storm clients, who find themselves in mountains of debts after following the group’s advice to borrow large sums through margin loans to invest in Storm-branded index funds. The fate of these clients has been thrown into confusion by the group’s collapse.
Storm’s administrators, Worrells Solvency & Forensic Accountants, are holding the first meeting of Storm creditors in Brisbane today.
Commonwealth Bank is the largest secured creditor and is believed to be owed around $30 million.
The meeting should give some more insights into the size of Storm’s assets and liabilities and exactly how many clients remain on its books.
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See also the feature Five lessons from the collapse of Storm Financial
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