Those allegations remain untested by the court, despite Matthews’ decision to place the business into liquidation.
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Lion, Sader and Pesochinsky have said that they deny these allegations and that the majority of Lion’s investors were happy with how their investments had been managed. They said the complaining investors did not understand the investment they had invested in, and also blamed a range of factors for the group’s delays, including COVID-19, planning issues and a bad builder.
The court heard on Wednesday that Lion was yet to provide any formal response to the allegations in court via a formal defence document or any affidavit material.
The fate of the investors’ money will now be investigated by liquidator John Lindholm from KPMG.
The Supreme Court heard that about $60 million of investor funds had been unaccounted for following a review by Lindholm of the limited documents provided by Lion.
Lindholm told the court that $37 million of investor money had been used on the group’s property projects, while another $37 million of investor money destined for property projects was instead redirected to Lion via loans or cash withdrawals.
Lion’s Eminence project in Camberwell.Credit: Joe Armao
The judge said she was concerned about the conduct of Lion during the proceedings.
“Much of the defendant conduct of this interlocutory process has been just inexplicable. They have not complied with a number of orders that I have made,” she said, noting that this was not the fault of Lion’s lawyers.
The judge also said Lindholme’s preliminary review of the business had raised significant concerns to appoint a liquidator.
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“He [Lindholme] indicated that he didn’t have all the documents that he needs in order to be certain of Lion’s situation,” she said.
“But that what he has seen thus far is – and which he described for the court – lead me to the very concerned financial state of these companies, and to be concerned as to whether or not any of the assets of the company are at risk.”
Lion had argued against the liquidation, with its lawyers telling the court the group was exploring a voluntary administration.
