Gene Farrelly, director of United Project Partners Pty Ltd.
Gene Farrelly, director of United Project Partners Pty Ltd. Contributed

Details of company's $8m collapse to be heard in court

>>RELATED: Losses 'in the millions' for Gympie and Toowoomba investors

THE liquidator of a property development company that collapsed owing $8 million will apply for a public examination of "key persons" involved in the operation of the business. 

United Project Partners Pty Ltd, part of the United Group, was a Gympie-based project manager and funder of property developments across Toowoomba and Gympie. 

UPP and several associated companies under the directorship of Gympie businessman Gene Farrelly went into liquidation in the middle of 2017, owing a combined $13 million to businesses, and people who had invested their superannuation in the group. 

Liquidator Adam Ward of Worrells Solvency and Forensic Accountants last month wrote in his annual report to creditors of UPP that a public examination of the company's affairs would "assist in maximising the recoveries of the outstanding loan accounts, further investigating voidable transactions and providing ASIC with a sufficiently detailed and evidenced supplementary report". 

"We believe that given the complexity of the company's affairs, it is essential to conduct a public examination of key persons involved in the operation of the company's business," he wrote. 

"A public examination should allow us to obtain testimony regarding critical details of the company's operations." 

United Group was established in 2011 by Mr Farrelly and boasted integrated business divisions that included a licensed real estate agency to sell and manage clients' property investments, a finance brokerage to arrange the credit needed to keep sales coming through, a project management section to develop its properties, a development and marketing department and its own qualified draftsman and a licensed builder. 

The operation worked like this; one of the companies in the group, Secure Holdings Qld Pty Ltd, raised money from self-managed super funds. 

One in four homeowners given mortgages last year would be rejected if they applied for the same loan this year, brokers warn. Picture: Penny Stephens
FILE PHOTO: United Project Partners was involved in funding property developments across Toowoomba and Gympie.

Investors loaned their self-managed super funds to Secure Holdings Qld for terms ranging between two to four years with interest payable yearly on interest rates of between 5-8%. 

Secure Holdings Qld then loaned on those funds to three associated companies, United Project Partners, One Thought Pty Ltd, and Summit Qld Pty Ltd. 

UPP borrowed the majority of the invested SMSF funds, which were used to undertake various property development projects across Toowoomba and Gympie. 

According to a report filed with ASIC by Mr Ward, Secure Holdings Qld "began to experience financial difficulty when both the interest payable on the loans to the associated entities and the original amounts borrowed were not able to be repaid". 

"The financial position of the company was further impacted by the inability of the company to secure further borrowings from new or existing super fund investors," he wrote. 

When the company went into liquidation in July 2017, Secure Holdings Qld owed $6.8 million, $5.4 million of which belonged to nearly 50 SMSF investors. 

At the time of Mr Ward's appointment to UPP as a voluntary administrator on May 9, 2017, "the company had suffered trading losses from unprofitable property developments and was experiencing severe cash flow shortages that impacted the ability of the business to continue to trade". 

Mr Ward and partner Jason Bettles were later appointed liquidators of UPP at the second meeting of creditors in July 2017. 

In his statutory report to creditors of UPP filed with ASIC in October last year, Mr Ward said the company also "had no ability to raise further finance to fund future property developments, had weak revenue projections and was carrying significant debt".

Housing bubble?: Treasurer says no, others say yes.
Housing bubble?: Treasurer says no, others say yes.