Sydney property developer Fincorp has collapsed owing up to $290 million to approximately 8000 retail investors and finance backers.
The mezzanine fund management and property development group, which has been plagued by regulatory action for several years, is made up of 22 separate companies that own 10 commercial and retail properties in Queensland and Victoria.
The group owes $200 million to retail investors and $90 million to undisclosed external financiers. It was handed over to liquidators KordaMentha on Friday.
All redemptions and interest paid on the company's sale of debenture notes will be frozen, KordaMentha partner David Winterbottom said.
"We are currently assessing the financial position of the group and investigating the current status of the Group's property assets," he said.
"We will not be in a position to estimate potential returns to retail investors and other creditors for some time."
Fincorp trades in the sale of high-risk secured and unsecured debenture notes - similar to the IOU-style of promissory note used by the Westpoint group - by investing in commercial loans secured by first and second mortgages.
Loans were used to advance development, construction and investment across various property sectors offering between 8 and 9 per cent returns.
According to Fincorp's website, the trustee of the assets is Sandhurst Trustees Limited, a subsidiary of Bendigo Bank.
The collapse comes just weeks after Fincorp launched an offshore income fund in New Zealand and the First Capital group announced to the Australian Stock Exchange that it intended to buy out the company.
In 2005 the NSW Supreme Court ordered Fincorp to pay back $75 million to around 1000 investors who lent money for development purposes.
ASIC took out an enforceable undertaking against the company in 2005 over concerns about misleading advertising.
Fincorp did not return calls yesterday.
ASIC said it was not commenting on the matter.
