Refund Home Loans, the sister company to recently established Refund Real Estate, has gone into voluntary administration effective from 5pm yesterday.
According to a communication sent from the administrators, SV Partners, to Refund Home Loan franchisees, increasing pressure from creditors forced the company to call in administrators to complete a clean and quick sale of the business.
Speaking to The Adviser, the sister publication to Real Estate Business, a spokesperson from Refund Home Loans said the administrators were currently working to protect the Refund Home Loans business, keep the business trading and secure a buyer for the business.
“As far as I am aware, there have been a number of companies that have expressed their interest in buying the Refund Home Loans business, but they are just waiting for the administrators to give them the green light,” the spokesperson said.
In a separate email sent to Real Estate Business, he said that Refund Real Estate, along with the company's financial planning division, wasn't affected by the decision to call in administrators, and they were still on track to reach their target of opening 50 offices by July next year.
The outfit currently operates one office, located in South Brisbane.
"The early signs from the South Brisbane real estate office, and the local market, are encouraging which indicates that our target of 50 is feasible," he said.
According to the Refund Home Loans website, the Refund Group, which commenced operations in 2004, also incorporates Refund Finance and Leasing, Refund Property, Refund Financial Planning and Refund Real Estate. It has 350 franchisees across all states and territories, it added.
The spokesperson said that the administrators were hoping to find a buyer that would keep the Refund Home Loans franchisee model intact.
“Right now it is business as usual for our franchisees. If there are any changes, the administrators will let them know in advance.”
According to the communication, up until the end of 2010, all costs for the growth of the company had been met out of cash flow.
At that point, it became apparent that further funding was required and the directors of Refund Home Loans expected to receive further support from the bank. However, the Queensland floods prevented that support being provided and the lack of further funding has left the company in the same position as before.
Whatever the outcome of this administration, SV Partners believes the directors may become bankrupt as a result.