Receivers have taken control of the Australian fundraising arm of collapsed New Zealand property lender Bridgecorp.
The savings of Australian retail investors are in jeopardy after it was revealed the North Sydney-based group, Bridgecorp Finance Limited, owes $24 million to about 1000 debenture note holders who lent money on the promise of high income yields.
It was stopped from raising more funds last year when ASIC became concerned about its exposure to Westpoint.
The group’s trustee Permanent Nominees yesterday appointed Ferrier Hodgson’s Brian Silvia and Andrew Love to run the company.
A Ferrier Hodgson spokesman said it was too early to know if investors’ funds were secure.
Bridgecorp’s New Zealand operations and subsidiaries were put into receivership on Monday after defaulted on repayments to investors.
It owes around $500 million to 18,000 investors, mainly in New Zealand.
Bridgecorp chairman Bruce Davidson said that in view of the receiverships, the company’s directors believe the Australian operations were likely to default on capital it owed investors.
“There is now a real possibility that [Bridgecorp] will be unable to repay in full all the outstanding monies falling due to the note holders under the [Deed],” Davidson said.
“The trustee is working with Bridgecorp, the receivers and ASIC and will continue to act in what it perceives to be in the best interests of the note holders,” Trust Institutional Services executive general manager Vicki Allen said.
Trust is also the custodian for property financier Australian Capital Reserve (ACR) which collapsed in May.
It followed the failure of Fincorp and Westpoint, which together with ACR owe retail investors around $1 billion.
Yesterday the Federal Court sought to wind up property development scheme, Mega-Money, which owes $13.5 million to 70 investors.
Its director David Sevelle was permanently banned from operating a financial services business.
This string of collapses challenges the notion – still popular among unsophisticated investors – that property is a safe investment while shares are high risk, financial health analysis company Lincoln managing director Tim Lincoln said.
Trust Company is the parent company of Permanent Nominees.
