Sphere Insurance Group’s liquidator has taken Federal Court action to freeze assets and gain information after finding on appointment that a client money trust account showed a balance of $44.15.

A creditors’ update says the balance later increased to $6344 after a payment made before the appointment was returned to the account.

Formal proof of debt and informal claims totalled about $11.7 million as of July 30.

“My preliminary investigations have identified a number of transactions warranting further investigation,” liquidator Tracy Lee Knight says in the update.

“These include transactions from the company’s trust account of a nature that appear inconsistent with its purpose and function.”

The transactions include a deposit paid to a real estate agent, short-term financing arrangements, repayments of those loans shortly before the liquidator’s appointment, and other transactions that may require more examination to determine “whether they were for the benefit” of Sphere director Peter Robert Lionel Marten or other parties.

The authorised representative network, headquartered in Mount Lofty, Queensland, entered liquidation last month. Ms Knight, from WCT Insolvency and Restructuring, was appointed liquidator on June 5.

On July 7, the Federal Court made orders permitting the public examination of five individuals, including Mr Marten, and requiring production of documents.

“For the avoidance of doubt, the matters referred to in this circular are preliminary in nature,” the liquidator says. “No final findings have been made, and the purpose of the ongoing investigations and public examinations is to obtain further information before any conclusions are reached regarding potential claims or recoveries.”

The liquidator has also taken legal action to preserve Mr Marten’s assets as investigations continue, with the Federal Court on Monday issuing a freezing order up to an unencumbered value of $4.5 million.

Inquiry activity has included meeting with Mr Marten and others associated with Sphere, and engaging with the Australian Securities and Investments Commission on preliminary findings, “including matters that may warrant investigation in relation to director conduct”.

Insurers, underwriters and authorised representatives have provided information regarding the trust account position, amounts owed and matters arising around Sphere-issued policies.

The liquidator has met informally with companies holding large claims against Sphere, including Vero, Hollard Commercial Insurance, NTI and QBE.

A formal creditors’ meeting is scheduled for August 17, when the liquidator will provide an update, request authorisation to engage law firm Thomsons to potentially begin proceedings and seek remuneration approval.

Mr Marten declined to comment when contacted by insuranceNEWS.com.au.