Embattled lender Gippsland Secured Investments has been placed into receivership, after the Federal Court blocked a six-week effort to bail out the mortgage fund on Monday.
About $143 million worth of deposits from about 3500 mostly Gippsland-based investors are now at the mercy of the receivership process, which until now have been frozen pending the Federal Court’s decision.
While the majority of GSI businesses and investors were from East Gippsland, with a small number of stakeholders in the West Gippsland area, Committee for Gippsland chief executive Mary Aldred said GSI’s collapse would have a flow-on affect through the entire regional economy.
“This is going to have a direct impact on local investors, retirees, mums and dad, which will be felt beyond direct stakeholders, however we will have to wait to see how the (receivership) process from here goes,” Ms Aldred said.
GSI froze investors’ accounts in July, after a review found its loan portfolio had been hit with asset write-downs and loan payment shortfalls.
The group representing investors’ interests, The Trustee Company, soon after moved to have the fund placed into receivership.
According to GSI’s most recent prospectus, released in early 2013 (now redundant), of the company’s $118.5 million loan security portfolio, $6.9 million was in the Latrobe Valley local government area.
Ernst and Young receiver Adam Nikitins said the receivership process was primarily concerned with the interests of investors.
“While the total returns for note holders are inherently uncertain at this early stage of the receivership, we expect the returns will be meaningful and exceed an estimated 80 cents in the dollar,” Mr Nikitins said.
A receivership hotline has been established for GSI stakeholders on 1300 551 378