Felmeri family company sells former offices in Wayville for $3.5m
The family behind failed builder Felmeri Group has sold the company’s former HQ for $3.5m – but is refusing to use the proceeds to repay creditors owed $30m.
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The family behind failed Adelaide building company Felmeri Group has sold the company’s former offices in Wayville for $3.5m, but is refusing to use the proceeds to repay creditors owed close to $30m.
A report from the company’s liquidators reveals the property was owned by Felmeri Group’s parent company Marcalek – a company controlled by Felmeri Group directors Frank Felmeri junior and his father Frank Felmeri senior – and was subject to a $1.8m loan from lender NAB.
Liquidators are trying to recover a $534,000 debt they claim is owed to Felmeri Group by Marcalek, in an effort to repay hundreds of creditors including insurer QBE and dozens of customers left with unfinished homes.
But according to the report, Marcalek is disputing the debt, and has engaged lawyers to fight the liquidator’s claim.
“Notwithstanding that there was no lease agreement or formal arrangement between Marcalek and the company (Felmeri Group) and no rental amounts paid, it is alleged that the company held itself out to be the tenant of the property and there is an implied lease between the company and Marcalek,” the liquidator’s report says.
“As a consequence, Marcalek asserts that it is entitled to recover market rent for use and occupation of the property, and the value of this rent should be set-off against the claimed debt (which claim would exceed the amount claimed by the company).
“My solicitors and I are considering these claims and have requested that Marcalek provide further particulars in support of its position.”
According to the report, the Marcalek debt is one of several related party debts being disputed by companies controlled by the Felmeri family.
A joint venture established by the family to oversee a housing development at O’Halloran Hill is also disputing claims it owes the failed company close to $900,000 relating to civil construction work at the estate.
Liquidators say that while there is also a “strong claim” against Frank Felmeri junior to recover close to $144,000 in company loans used to fund his personal expenses, he did not have the financial capacity to repay that debt.
Meanwhile, Malaysian-backed investor My Assets (Australia), which last year promised to pay more than $5.1m for a 20 per cent stake in Felmeri Group, is refusing to complete a $3.3m payment for shares it had agreed to acquire, claiming that certain conditions had not been met and that Felmeri Group had engaged in misleading and deceptive conduct during its negotiations.
My Assets (Australia) is owned by Melbourne-based couple Sy Choon Yen and Yen Loo Looh – relatives of Malaysian timber tycoon Admond Looh. They own several allotments in the stalled Wallaroo Shores resort project, which Felmeri Group was building before its collapse.
In his report, liquidator Leigh Prior says that while he has notified ASIC of his belief that Frank Felmeri junior and senior may have breached corporations laws, including insolvent trading and false or misleading conduct, the regulator had decided not to undertake its own investigations.
“My investigations identified that it’s likely the company traded whilst insolvent for an extended period of time and that the directors may have breached their duties in relation to acting in good faith and in the best interests of the business,” Mr Prior told The Advertiser following the release of his report.
“Those offences have been reported to ASIC, as I’m obliged to do, and throughout the ongoing course of my investigations if further offences are identified, they too will be reported to ASIC, Consumer and Business Services or other statutory bodies as appropriate.”
Mr Prior’s latest estimates put Felmeri’s debts at $28.3m, including $27.5m owed to more than 200 unsecured creditors including suppliers, customers and insurer QBE.
However, he says those estimates are likely to increase as more claims are quantified.
He expects unsecured creditors to receive a maximum dividend of just 3c in the dollar.
The Advertiser revealed in August that the Felmeri family had amassed a property portfolio worth close to $12m by the time of the company’s collapse in May, including the company’s former headquarters, a luxury home in Hallett Cove and an apartment on the Gold Coast.
Frank Felmeri senior declined to comment. Frank Felmeri junior has been contacted for comment.
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Originally published as Felmeri family company sells former offices in Wayville for $3.5m
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