A boutique firm becomes the latest construction firm to collapse – owing 450 investors $70m and casting doubt on construction projects across Melbourne
- REMI Capital was placed in voluntary administration on Wednesday
- The investment firm is expected to raise up to $70 million to 450 investors
- It comes as the construction industry faces setbacks with costs going through the roof
- An insolvency expert has suggested their downfall may not have been due to the current turmoil
An Australian property investment company has collapsed in front of $70 million to around 450 investors.
REMI Capital, which has an office in Melbourne, was placed in voluntary administration on Wednesday. The company’s Brisbane office has already been closed for some time.
The company’s projects included a boutique real estate development, healthcare real estate and a mixed-use shopping center.
Administrators receive numerous calls from investors regarding the collapse of Remi Capital (pictured in Melbourne)
His property portfolio stretched across Melbourne, including projects in Tarneit, Rockbank, Sunshine, Pakenham, Laverton and Sunbury.
Jirsch Sutherland Queensland partner Chris Baskerville, who is the boutique company’s appointed volunteer administrator, said they were getting calls from investors about the collapse.
“We are undertaking a financial assessment and working closely with the administrators to try to find the best outcome for investors and creditors,” Mr Baskerville told The Australian.
‘We are not sure of the level of sophistication of investors but REMI has issued several different ratings [to fund projects],’ he said. “We are early days, but we are urgently investigating the collapse. One of the issues we will be looking into is the $70 million debt.
The company’s administrator said he was carrying out an urgent investigation into the collapse and would look into the $70 million debt issue.
Mr Baskerville said the company’s downfall was unrelated to the current turmoil in the construction industry.
The news came as the industry was in danger of collapsing due to rising interest rates, supply chain issues and the war in Ukraine – with skyrocketing costs.
Insolvency expert Thyge Trafford-Jones told News.com that industry players are in financial trouble as Covid financial support dwindles.
Low interest rates and economic pandemic response had helped the construction industry stay above water.
Mr Trafford-Jones said it is not just small and medium-sized businesses that are struggling, but also the biggest ones.
Even some big guns listed on the Australian Stock Exchange have come under fire.
“They’re really holding their heads above water and just paying off the interest on those debts they got in times of low interest rates,” the insolvency counselor said.
Some of the players under the pump this year have been Metricon, Probuild, Gold Coast-based Condev and builders Home Innovation.
Construction giant Metricon is reportedly on the verge of collapse due to rising costs and interest rate hikes.
Just this month it held crisis talks amid cash pressures in the construction industry as it reeled from the “sudden and unexpected” death of its founder Mario Biasin.
Construction giant Probuild, one of Australia’s biggest, collapsed last February along with several other rivals after a South African parent company withdrew all financial support.
Probuild was responsible for a billion dollar accommodation and entertainment project – The Ribbon – at the Darling Harbor redevelopment site.
Metricon is reportedly on the verge of collapse due to rising costs and interest rate hikes