More property projects halted as NSW debenture business hits trouble

The debenture issuing arm of financial services group Momentum has been placed in receivership, owing investors about $36 million. The collapse has resulted in work being halted on three projects in Newcastle.

The debenture issuing arm of financial services group Momentum has been placed in receivership, owing investors about $36 million. The collapse has resulted in work being halted on three projects in Newcastle.

The firm, which is based in Port Macquarie, also has insurance and investment arms, but these are not affected by the collapse of the debenture division.

Joseph Hayes and Tony McGrath of McGrathNicol were appointed receivers of the debenture arm, called Momentum Mortgages Limited, be the secured creditor Permanent Nominees. The directors of MML also appointed David Leigh of PPB Chartered Accountants as voluntary administrator.

In a statement, Hayes blamed the collapse of MML on a general downturn in the domestic property market, increased debenture holder redemptions following the collapse of other small financial services companies, and an increased incidence of borrower default.

“The directors formed a view that they would be unable to meet their funding commitments to borrowers and obligations to pay interest and principal due to debenture holders.”

According to The Australian Financial Review, the collapse of MML has resulted in work stopping on three projects in Newcastle, including the redevelopment of the Bellevue Hotel in Newcastle’s West End.

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