Community leaders in the east Victorian town of Bairnsdale have expressed doubt over the region's financial future after rural lender Gippsland Secured Investments was placed into receivership, leaving $143 million in local savings at risk.
The collapse of the non-bank lender, which froze investor funds last month, comes as a fresh blow to Victorian investors after the collapse of non-bank lender Banksia Securities last year.
The collapse of GSI follows a drawn-out battle in the Federal Court to try to save the company by a group of local investors who had pledged $2.2 million to a rescue package. The bailout proposal was thrown out on Monday.
Gippsland Angus cattle farmer Lea Worseldine (pictured) said she had a ''substantial'' amount of money tied up in GSI which she was anxious about losing. She started farming with her husband, Barry, through a loan from Banksia Securities 33 years ago and had lost a small amount when it collapsed. ''The repercussions for the township are going to be horrendous,'' she said.
''If we get 85¢ back, I guess that's better than nothing. We could use the money though,'' she said.
On Tuesday, trustee The Trust Company appointed Ernst & Young partners Adam Nikitins and Simon Cathro as receivers of the firm.
David Grbin, an executive at The Trust Company, said a cursory examination of the company's books revealed mismanagement in the lead up to its collapse.
He cited a lack of ''tangible assets to meet GSI's obligations to note holders''.
He said the decision to appoint receivers came after an ''exhaustive examination'' of other options.
''As Trustee we have worked closely with GSI for an extended period to try and resolve these issues in the business and protect the interests of note holders," he said.
East Gippsland mayor Dick Ellis said the council had enlisted several non-government groups, including Anglicare and the Salvation Army, to make assistance packages available to members of the community who were severely impacted by the collapse.
''This organisation catered for the whole spectrum of the community,'' he said.