Investors in the failed Shield Master Fund face further delays as the Federal Court reviews a proposed distribution plan that would allocate the majority of a $102 million payout to investment firm Macquarie. On Monday, liquidators for the Shield and First Guardian funds appeared before Justice Mark Moshinsky seeking approval for the distribution, which would direct approximately $71 million to Macquarie and $31 million to Shield investors.

Macquarie's large share of the payout stems from its acquisition last year of holdings belonging to over 3,000 Shield investors, following a reimbursement of some $321 million originally invested in the fund. Meanwhile, approximately 2,800 other investors, who accessed the fund through different platforms, have not yet received any repayments.

The $102 million sum represents just over half of the proceeds from the sale of Shield’s listed equities carried out earlier this year by liquidators Jason Tracy and Glen Kanevsky of Alvarez & Marsal. The remaining $92 million has been allocated to cover fees and contingencies, including roughly $22 million in legal expenses, $11 million in liquidator fees, and an $8 million contingency reserve. Additional funds have been set aside to potentially cover adverse costs should claims to recover $158 million allegedly transferred to building contractor Robert Filippini fail, and to address possible management fee claims from Keystone Asset Management, Shield’s former responsible entity.

Investors have been informed that the liquidation process is expected to continue until 2031, although some distributions may be made this year. A previously scheduled February payout was halted after liquidators from the related First Guardian fund, FTI Consulting’s Ross Blakeley and Paul Harlond, filed a $99.63 million proof-of-debt claim, delaying the distribution.

First Guardian, like Shield, collapsed under scrutiny related to alleged misappropriation of investor funds and affected more than 11,000 investors in total. Shield director Paul Chiodo is linked to both failed funds. FTI Consulting subsequently reduced its claim, now requesting only that $1.3 million be retained in reserve against potential future claims on Shield.

During Monday’s hearing, Justice Moshinsky raised several concerns, including potential tax liabilities and investors’ possible damages claims. He also questioned the fairness of making a distribution to Macquarie but not directly to investors who have suffered significant financial losses, including some who lost their life savings.

If approved, the distribution would not be uniform across all Shield fund asset classes: half of the cash balance would go to growth-class investors, $30 million to balanced fund participants, and $15 million to conservative-class investors. Those in the high-growth class would receive around $5 million, while investors exclusively involved in the property development segment—Shield’s Advantage Diversified Property Fund—would not receive any payout.

Meanwhile, First Guardian investors face more limited recoveries, with FTI having recovered only $4 million of the approximately $500 million invested. The firm had initially blocked Shield’s distribution by asserting that much of First Guardian’s funds were invested in property projects managed by Chiodo through the Chiodo Diversified Property Fund, which overlapped with Shield’s property investments. However, concerns around commingling of funds appear to have been largely resolved.

Shield liquidators maintain that First Guardian’s investments were connected to property projects and separate from the $194 million invested in listed securities that were sold earlier this year. The court is expected to hold at least one more hearing before ruling on the distribution application.