The High Court has given Pyne Gould Corp subsidiary Perpetual Trust 10 working days to come up with a plan to liquidate one fund and internalise another.
Judge Paul Heath on Friday ordered Perpetual to figure out a way to wind down its frozen mortgage fund and internalise its cash management fund before another hearing on August 17, according to his judgment.
He also ordered observers, Vivian Fatupaito and Christopher Duffy of WHK, should continue in their role.
"At this stage there is a live issue over whether, in the form that internalisation is intended to take, the statutory supervisor (or some other form of supervision) should continue to be required, whether at the discretion of the court, or otherwise," the judgment said.
Perpetual's statutory supervisor, Trustees Executors, sought an order after the cash management fund was used to loan $28 million to the related Torchlight Fund No 1 LP, which is managed by Pyne Gould principal George Kerr.
"I am told by counsel that 'internalisation' of the cash fund is intended to restrict the allotment of units in that fund to investors which are, broadly, trusts of which Perpetual is a trustee, or other do not constitute 'members of the public'," the judgment said.
Perpetual froze repayments of its $56.2 million mortgage fund, which it now wants to wind up, after a surge in redemption requests after details of the cash fund's to the Torchlight fund emerged.
The loan has since been repaid by Torchlight, and Pyne Gould is now looking at ways to divest some or all of its Perpetual unit.
The repayment of the Torchlight loan means any concerns "arising out of the past conduct of those who were responsible for making the decisions to lend to Torchlight can now safely be left to the (Financial Markets) Authority or the statutory supervisor," the judge said.
"No further action is presently required from the court."