Banksia Securities was a mortgage fund incorporated in 1968, raising funds by issuing debentures to retail investors in regional Victoria, which progressed to third party borrowers for property investment.
A reduction in property values, poor provisioning and challenging credit market conditions, coupled with low equity levels led to solvency concerns and the appointment of Receivers in 2012. At that stage Banksia had $600 million in loans outstanding to 1,200 borrowers, and owed funds to 16,000 investors. The Receivers:
- Embarked on a communication program with a range of stakeholders including government, borrowers, investors and other stakeholders
- Undertook a review of all loans and provisions, to calculate returns to investors;
- Put in place arrangements to ensure the balance of group companies could operate solvently;
- Prepared a comprehensive report to investors which was presented at meetings in three country locations;
- Liaised with government concerning hardship cases and conditions;
- Considered options to market and sell a loan portfolio of about 300 loans, commenced a sale process and sold the portfolio to an institutional fund
- Considered options to market and sell a contributory mortgage scheme, commenced a sale process and sold the portfolio to an institutional fund;
- Undertook portfolio analysis and enforcement processes for about 200 loans from defaulting borrowers;
- Reporting to Trustee and Committees of Investors
- Commenced litigation against multiple parties for damages associated with the failure of the fund;
- Appointment of Special Purpose Liquidators and Receivers to manage litigation processes;
- Management of multiple mediation processes
To date 82 cents in the dollar has been returned to debenture holders, with further returns to follow.