Hundreds of people have been impacted alonggside property projects as administrators urgently investigate where the money has gone.
An Australian company with offices in Melbourne and Brisbane has collapsed impacting hundreds of people and property projects as it was revealed it owed an estimated $70 million.
The collapse has seen 450 investors impacted as the investment company, which is called REMI Capital, was placed into voluntary administration on Wednesday.
Mark Prestige, who had been managing partner at REMI Capital for close to four years, acknowledged there had been a “lack of communication” from the company in recent weeks.
“Remi had been advised by external legal counsel not to communicate over recent weeks until the modelling was complete that allowed this difficult decision to be made,” he wrote in an email addressed to investors, shareholders and ex-staff members.
“REMI apologises for any lack of communication in recent weeks. We ask you rely on any reports to creditors and not rely on any speculation you may hear.”
The independent investment company had promised access to “responsibly and ethically managed investments” and included a range of boutique property developments, its website showed.
Its property portfolio spanned a range of areas in Melbourne including projects in the suburbs of Tarneit, Rockbank, Sunshine, Pakenham, Laverton and Sunbury.
REMI Capital was also spruiking income products backed against the company and their assets, paying quarterly interest payments to investors, the company said on its website.
It claimed to have significant reach across Australia with penetration into the overseas market, including the APAC region and South Africa, it added.
Chris Baskerville from specialist insolvency and business recovery firm Jirsch Sutherland has been appointed as administrator.
He said it was too early to tell what had happened, with his firm currently undertaking urgent investigations to map out where the $70 million has gone.
“We are undertaking an urgent financial assessment and working closely with the directors to try to find a solution and provide the best outcome for investors and creditors,” he said.
“One of these solutions is likely to be a Deed of Company Arrangement (DoCA) proposed by the directors.”
A DoCA attempts to maximise the chances of the company to continue to operate and aims to provide a better return for creditors then an immediate winding up of the business, according to the Australian Securities & Investments Commission.
Mr Prestige, who led the company which was formerly known as C2 Capital, said he had sympathised with affected parties and that voluntary administration was decided as the “best outcome” for creditors.
“This process will allow a Deed of Company Arrangement to be proposed by the board by the second meeting of Creditors,” he said.
“Based on current modelling, a DOCA will result a better return to all creditors rather than the alternative course of liquidation where the outcome does not look positive.
“Remi is committed to continue working with the administrator and creditors and for favourable consideration when the detailed DOCA proposal is submitted.”
The administrators have been contacted by a number of REMI Capital investors already with a creditors meeting scheduled for June 6.
It comes as companies at the “big end of town” including those listed on the Australian Stock Exchange are at risk of collapse as interest rates rise and financial support for Covid is wound up, insolvency experts have warned.
Financially distressed businesses, which have been propped up by a pause on debt collection during the pandemic as well as the injection of economic support from governments, often known as zombie companies would also be a “growing phenomenon”, they added.
The construction industry in particular has been badly hit by collapses this year.
Smaller operators like Hotondo Homes Hobart and Perth firms Home Innovation Builders and New Sensation Homes, as well as Sydney-based firm Next have also collapsed, leaving homeowners out of pocket and with unfinished houses.
An industry insider told news.com.au earlier this year that half of Australia’s building companies are on the brink of collapse as they trade insolvent, and it could see thousands of people’s homes impacted in the coming months.
Operators in other industries have also fallen over.
Send, a company that promised to deliver groceries in under 15 minutes, collapsed earlier this month putting the jobs of 300 staff in Sydney and Melbourne at risk.
Concerned REMI Capital investors should contact the administrator on Remicapital@jirschsutherland.com.au.
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Originally published as Australian investment company REMI Capital collapses owing $70m