Creditors set to suffer in $19.1m real estate collapse

The latest reports into the collapse of a highly diversified real estate and financial services group shows creditors will see almost no return.

Four related entities of the Charterhill Group owed $19.1 million when they entered insolvency in January-February 2014, according to documents recently filed with ASIC.

The Adelaide-based group offered a range of services including real estate marketing, property management, mortgage broking, contract negotiation and SMSF advice.

One of the four companies, Nova Real Estate, owed $7.6 million, according to a report filed by the liquidator, Andrew Heard of Heard Phillips.

Mr Heard’s presentation of accounts and statements, which covers the period between 25 February 2014 and 24 February 2015, shows he recouped only $49,500 during that time.

Mr Heard is also acting as liquidator for broking business Lending Solutions International, one of the other related entities.

The latest numbers show that creditors are owed $10.2 million but that only $31 has been recovered.

Michael Basedow of Pitcher Partners is acting as receiver and manager of the final two entities: EJ Property Developments and Financial Wellness.

Those two companies owe a combined $1.3 million but have only collected $39,000 in payments, according to Mr Basedow’s presentation of accounts and statements.

In total, only $89,000 of the $19.1 million in debts has been recovered or less than 0.5 cents in the dollar.

Charterhill director George Nowak was ordered to surrender his passport in February 2014 and filed a petition for bankruptcy in July 2014.

Soon after the group’s collapse, Mr Nowak sent an email to clients in which he blamed Charterhill’s diversification strategy for its demise.

“As you are aware, Charterhill Group and its associated entities have provided a ‘one-stop shop’ for our clients which is unique in Australia in this industry but, unfortunately, it has come at a cost,” he said in the email.

“The infrastructure required to perform all the various tasks involved in the process has been a severe drain on our cash flow and capital and we have reached the point where we can no longer function as a profitable business.”

ASIC announced last July that it had formed a task force to investigate one-stop shops, and that Charterhill’s collapse had “raised a number of questions” about this strategy.

An ASIC spokesperson told Real Estate Business that its investigation into Mr Nowak and the collapse of Charterhill is continuing.

“Public statements on the outcome of that investigation will be made as soon as ASIC is in a position to do so,” the spokesperson said.

“ASIC expects all licensed financial services business to manage any conflicts of interest, put their clients' interests first and ensure that any related parties and transactions are disclosed to clients.”

[Related: Collapsed property spruiker’s missing millions]

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