Melbourne’s father called the current situation “torture” with the business owing $70 million to creditors, but a bombshell email revealed the extent of his problems.
A Melbourne family were ‘shocked’ and heartbroken after an Australian investment firm went bankrupt on Wednesday that owed them $300,000, but a bombshell email revealed the extent of the company’s problems well before its liquidation.
REMI Capital went bankrupt with a huge debt of 70 million dollars and 450 investors impacted.
Richard*, a father of two, had used the business to invest with a wife and friend, and together the trio owe hundreds of thousands of dollars, although he tried to withdraw the money before the fall of REMI Capital.
Part of their investment included a $150,000 payout after he claimed his wife had been bullied at work, with Richard describing it as ’emotional money’.
Now they fear they will never see their money after Chris Baskerville of insolvency firm Jirsch Sutherland was appointed as administrator, with the company undertaking urgent financial investigations to determine where the $70 million went.
“It’s heartbreaking. I go home at the end of the day and my wife and I are in tears separately on the way home from work,” Richard told news.com.au
“It’s very moving, it impacts my relationship with my wife.
“It’s torture. We don’t know how long this will last.”
Richard said the trio started investing with REMI Capital in May 2019, when it was originally called C2 Capital, before changing its name in July last year.
All was well with interest payments being made on time, he said.
But when Covid hit, that all changed, with payments initially delayed for two to three months before exploding to four to five month wait times.
“When there was a two to three month overdue payment, they paid it back with extra interest, so we didn’t see any signs of a problem,” he said.
But when Richard asked for their funds to be returned after the investment was completed, as the family wanted to buy a house, things started to go wrong.
Payments including amounts between $25,000 and $125,000, which were due from September last year, were not paid and he contacted the company for an explanation.
The investor trio received an email on March 25 this year from Peter Kral’s chief financial officer at REMI Capital, who said the company had “experienced several delays in repayments” over the past few months.
In the explosive email, Mr. Kral said the company was “offering you a plan to pay monies owed” and blamed a number of factors for the delays, including “the forfeiture of loan/money repayments by parties external to Remi totaling approximately $4 million (Aus) which was due to be repaid to Remi late last year/early this year”.
Other reasons highlighted by Mr. Kral included the impact of the pandemic and “the restructuring of the company which is taking time to deliver results while dealing with the issues inherited from the former director”.
He also revealed that the sale of properties was “time-consuming and subject to significant delays” and that there was “failure of promised funding to effect settlement and unlock existing equity in ongoing projects”.
“Rémi is currently in the process of selling several major real estate assets. These divestments are expected to create liquidity events shortly,” he wrote in the email.
“Remi expects to make significant payments in mid to late April on amounts at least 50% outstanding and the balance within a reasonably short time thereafter.”
There is no suggestion of wrongdoing on the part of Mr. Kral.
Desperate plea for money
But no payment was ever made, according to Richard.
His wife emailed the company on April 11 asking for the $245,000 invested by Richard and his friend and the couple’s additional $63,000 to be returned, offering to waive the $33,000 in unpaid interest for the two, adding that they were “living hard financially due to the late payment”. .
But the family never received an answer to their desperate appeal.
In an email earlier this week, REMI managing partner Mark Prestige acknowledged there had been a “lack of communication” from the company in recent weeks in an email to investors and shareholders.
“Remi had been advised by outside legal counsel not to communicate for the past few weeks until the modeling was complete, which made it possible to make this difficult decision,” Mr. Prestige wrote in the e- mail.
In an email to investors on April 29, the company said law firm HWL Ebsworth had been appointed and a plan would be provided in 14 days, but it’s unclear if that ever happened. product.
News.com.au can reveal that at least one creditor had demanded payment of the debt under the Companies Act 2001 by May 3.
Affected investors had also contacted the Australian Securities Investment Commission for help before REMI collapsed.
Exodus of staff
It is understood that REMI Capital had employed more than 50 investment, venture capital and real estate professionals, but many employees had left the company in recent months.
Richard’s account manager emailed March 8 saying he had been seeking answers regarding late payments for “some time now” and was “completely embarrassed and angry at the action shown by our management team.
The email added that he had “no account visibility” but would continue to fight for his clients.
However, he resigned from the company three weeks later, saying there was “terrible” communication, a lack of timely payment to customers and that he owed a retirement pension.
“As a man with a young family and responsibilities, resigning from my job is not something I take lightly, and it’s certainly not the easy option to take, but I think it’s is the right and ethical thing to do,” he wrote. in an update to customers.
Richard, who has two children aged three and six, said the family had recently brought in a new car awaiting reimbursements from REMI Capital to help pay it back, while he was also worried about the funding for her children’s education.
All of the family’s savings are tied to the business, he added.
“For me personally, I’ve set back 10 years in terms of finances. It’s impacting my relationship and everything, they knew they were having issues last year,” he claimed.
The business goes dark
After news.com.au announced REMI’s disappearance on Thursday, the company shut down its website and social media accounts, while Mr Prestige also deactivated his LinkedIn account.
Despite the difficulties the company was facing, its LinkedIn had run a series of posts over the past few months urging investors in self-managed super funds to consider diversifying their portfolios and investing in the group.
“What makes a good investment for an SMSF will depend on the objectives of each fund,” read one article.
“If you are looking for an investment to improve your portfolio, speak to one of our experts today!”.
The company had promised access to ‘responsibly and ethically managed investments’ and included a range of boutique property developments, its website showed ahead of its closure.
Remi also had a real estate portfolio worth millions with key projects that he offered to investors.
His property portfolio spanned Melbourne, including a site in the suburbs of the Tarneit site which he acquired for $9 million to turn into a mixed-use development and his flagship project in Rockbank which was purchased for $30 million. million, with plans for a major activity center.
Administrator Mr Baskerville said he did not believe the company’s entry into administration was related to challenges in the construction industry and that he had not heard of the impact of the rising material costs or labor shortages, etc.
“We believe the issues were finance related and will continue our investigations to identify the cause of the issues. Our role is to deliver the best outcome to creditors,” he told news.com.au.
He said REMI owned two properties and had the option of buying another and options currently being explored included carrying out a marketing campaign to sell the properties locally, seeking a refinancing program or any other option in the interest of creditors.
A meeting of creditors will be held on June 6.
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