HUNTER families and their superannuation funds are caught up in the $13 million collapse of Merewether-based small business lender Funda and a related company.
Funda, a fintech touted as an alternative to the big banks, and related company Collaborating Pty Ltd, were placed in voluntary liquidation in early December.
According to initial documents filed with the Australian Securities and Investments Commission (ASIC), Collaborating owes unsecured creditors more than $11.1 million and Funda, also known as Ownright Pty Ltd, owes unsecured creditors more than $8.1 million.
Of the $8.1 million owed by Funda, $6.1 million is listed as being owed to Collaborating.
The report to ASIC, based on information provided by the directors, reveals the largest unrelated unsecured creditors are two Merewether-based superannuation funds owed $3.6 million and $2.1 million.
More than $6.6 million is listed as being owed to Merewether creditors, where Funda's office was based in Patrick Street.
It's understood Collaborating sourced a privately-funded "loan pool" of up to $10.5 million and that money was then used by Funda to provide small business loans.
Funda, a non-bank lender that wrote its first loan in 2013, offered flexible and fast, but more expensive business finance.
Both companies were run by co-directors Mark Owen, who until recently was the treasurer of Merewether Surf Life Saving Club, and Nathan Wright, a club member of 15 years and former rescue boat captain.
It's understood some present and past surf club members are among dozens of creditors, most from the Hunter, facing the loss of millions in superannuation and savings.
The companies are now under the control of liquidator Bradd Morelli, of Jirsch Sutherland.
An initial snapshot of the two companies' financial position provided by Mr Wright in December showed that Collaborating had $109.80 in the bank when it collapsed and Funda had $46,107.
In terms of assets, Funda lists a "loan pool" owed to the company valued at $2.56 million and software valued at $730,634. It's unknown at this stage how much will be recovered.
Collaborating lists its assets as $5 million in Funda shares and $5.5 million owed to the company by sundry debtors, both of which are estimated to be worth nothing.
Mr Wright admitted this week that the companies couldn't meet their financial obligations and said the directors had tried since March last year to negotiate with creditors to keep the operation running.
He said "the majority" of creditors were on board, but "a minority" forced the liquidation.
"We had a proposal that was discussed for the last eight months," he said. "Unfortunately it came to a point in time when there were some people who didn't want to participate ... The path we have been forced down is unlikely to be a good outcome."
Several creditors told the Newcastle Herald they strongly disagreed that the majority were on board.
It's understood the latest, of several proposals to creditors, was to allow the companies to keep trading if creditors agreed to write off 75 per cent of what they were owed, instantly wiping millions from their savings and super funds.
Under the plan, the creditors who provided money for loans would hope to be paid 25 per cent of their money within three years.
Mr Wright said Funda's average loan was $46,000 to small businesses, mainly secured by personal and company guarantees.
He described the business as "extremely lucrative" in the early days and said it did not rely solely on private money to provide loans.
Both directors blamed the demise of the companies on the pandemic and said the business-focused, non-bank lending sector, including many of Funda's competitors, were struggling to survive.
Mr Owen, Funda's chief financial officer, said it loaned "tens of millions of dollars" to thousands of clients over the past ten years.
He said private lenders accounted for a "small percentage" of money used for loans.
"We had multiple streams of capital'," he said. "It will come out in the liquidators report of how the organisation was structured and what went wrong."
Asked why the bulk of the creditors appeared to be people and super funds who provided private money, Mr Owen said he did not know why.
"We never solicited any lenders," he said. "They were all referred to us from word-of-mouth or other sources."
Merewether Surf Life Saving Club president Nick Newton, a creditor, confirmed this week that Mr Owen had stepped down from the position of club treasurer.
Mr Newton said an audit had been carried out of the surf club's books and there were no issues.
"I'm one of the biggest losers in all of this and I've got reason to be upset," he said.
"But by the same token, until the final liquidator's report comes out, and they have a legal obligation to do a correct analysis of the situation, we really don't have all the details of what happened."
Funda was based at 5/91 Frederick St, Merewether. The building was purchased by Frederick St Office Pty Ltd in October 2016 for $1,045,000 and sold in December 2022 for $1,550,000.
Mr Wright and Mr Owen were the sole directors of Frederick St Office Pty Ltd when the company owned the office space.
Funda was named as a finalist in the NSW/ACT Fintech lender of the year at the annual Mortgage and Finance Association of Australia (MFAA) State Excellence Awards in 2020.
At the time, Mr Wright said Funda was established to offer faster service than large banks.
The lender's website, which is no longer in operation, boasted that loans were assessed within 24 business hours.
"Our aim is simple: we provide SME's with a great finance solution," it read.
Funda was also recognised at the Hunter Business Awards in 2019 for excellence in small business with a staff of between five and 20.
It's understood Funda employed 12 employees and contractors at its peak.
Several creditors contacted by the Newcastle Herald declined to comment.
- Do you know more? Donna.page@newcastleherald.com.au
