http://www.theaustralian.news.com.au/business/story/0,28124,25519...

http://www.theaustralian.news.com.au/business/story/0,28124,25519004-5018010,00.html

Anthony Klan | May 22, 2009
Article from: The Australian
HUNDREDS of investors in the failed Timbercorp and Great Southern agribusiness empires are threatening to stop paying maintenance fees on their crops in a move that could derail some schemes entirely.

Melbourne law firm Macpherson & Kelley is representing more than 300 investors who claim they had been mislead about the stability of the schemes and were unwilling to make further investments.

Analysts have warned that many of the 85 agricultural schemes promoted by Timbercorp and Great Southern could be forced to be wound up if investors refused to meet maintenance payments.

Macpherson & Kelley principal Ron Willemsen, who is working with major financial planing firms, said some investors who had borrowed money from the groups to invest in agricultural products were also refusing to repay those loans.

"Timbercorp's administrators have sent out a spate of letters calling for all people with outstanding loan arrears to get up to date, otherwise the whole balance of those loans will be payable," Mr Willemsen said.

He said Timbercorp administrators KordaMentha had given borrowers 14 days to meet those payments, with that deadline expiring today.

Timbercorp, which collapsed late last month, is owed $478 million by investors who borrowed money from the group to invest in its agribusiness schemes.

Those schemes used legal loopholes to provide agricultural tax breaks to ordinary investors.

Mr Willemsen said most of his clients were investors of Timbercorp.

He said the group was representing about 30 investors of Great Southern -- which collapsed on Saturday -- but that number was expected to grow substantially in coming weeks.

Mr Willemsen said Timbercorp investors would argue that the agribusiness giant breached fiduciary duties and engaged in "misleading and deceptive conduct" under the Trade Practices Act.

"We believe there has been a breach of fiduciary duty by Timbercorp Securities as the responsible entity in failing to disclose the true financial position of the group when October 2008 invoices were sent out to clients," he said.

KordaMentha has called on Timbercorp investors to make all payments due under the normal course of operations.

"We have told grower investors they are required to continue to make payments to both loan and project costs," a spokesman said yesterday.