Melbourne’s GR Finance appoints administrators

GR Finance, which provides short-term finance particularly for the building industry in return for returns of up to 10.05%, has been placed in administration.

Stephen Dixon and Laurence Fitzgerald of BDO Business Recovery & Insolvency have been appointed to the 11-year-old Melbourne-based business, which lends money against property, companies and shares.

BDO was contacted for comment this morning but representatives were not available prior to publication.

GR Finance’s offices were still open this morning but SmartCompany was told directors were in a meeting.

The company’s investment prospectus had been removed from its website.

A creditors’ meeting will be held on Thursday, October 20, one week after the appointment of BDO.

On its website, GR Finance proudly laid out its record of protecting investments through the downturn.

“The fact is that despite the uncertainties across the financial industry caused by the global financial crisis, we have never defaulted on an investment and every investor who has placed money with GR Finance has received their principal back in full at the end of the agreed term plus every cent of interest due to them.”

“The average yield on investments in GR Finance over the previous 10 years has been in excess of 9%, even during the global financial crisis and the trend has now returned to an upwards trajectory.”

A minimum investment is just $1,000, with investment timeframes ranging from three months to five years.

In its financial report for the half year ended December 31, 2010, GR Finance reported profit after tax was $101,692, up from up from $60,809 the previous corresponding period.

Under likely future developments, the report said: “The company expects to maintain the present status of its operations while continuing its strategy for growth in the volume of funds under management. Directors are actively pursuing a number of strategies that have been developed to enhance the business and opportunistically enlarge the scope of the operations in the current economic environment.”

Revenue for December 2010 was $1.59 million, up from $1.27 million the previous corresponding period.

Calls were made to non-executive chairman Rod Young, who is executive director of DC Strategy.

Other directors at December 31, 2010 were Philip Boyle, formerly of ANZ Banking Group and the Esanda Finance Corporation, Justin Mastores and Roydon Euan Luff.

The company has previously pushed regulators to change the way it requires smaller finance companies to keep large amounts of cash at hand.

In a 2007 submission to the Australian Securities and Investments Commission regarding unlisted unrated debentures, director Justin Mastores said “smaller financiers should not be compelled to hold three months cash needs estimate in reserve on an ongoing basis and rollover figures should be taken into consideration if a ratio is to be calculated.”