Refund Home Loans owes creditors $9.7 million as relations with franchisees turn sour

Collapsed mortgage broking business Refund Home Loans owes 119 creditors a combined $9.7 million, minutes of the first creditors’ meeting held in Brisbane have revealed.

Earlier reports said Refund was placed into voluntary administration owing $2.5 million. There has been no indication yet as to what the assets of the company are worth.

Creditors include Refund Home Loans franchisees, law firm DLA Piper, mortgage broking training provider Intellitrain and WA-based Ourimbah Holdings Pty Ltd.

At the meeting administrators said a second creditors' meeting was scheduled for November 16, but won approval from creditors for an extension of up to 45 days. 

Mortgage industry newsletter MortgageMix.com.au reports that the once “amicable relations between [Refund founder] Wayne Ormond and Refund franchisees have soured quickly”.

This follows reports that up to 50 franchisees now plan to take legal against the franchisor, serving the brokerage with breach of contract notifications just a month after Refund's original claim the relationship with its franchisees remained cordial.

A source close to Ormond and the Refund business told Property Observer that top franchisees were urged at a creditors’ meeting on October 24 to continue to trade as normal in an effort to attract a buyer for the business.

The size of the business – more than 350 franchisees – is one of its strong selling points and could prove attractive to a rival mortgage broking business looking to expand its distribution network.

Before its collapse Refund was valued by Deloitte at between $40 million and $50 million. However, new ventures were being funded out of cash flow since being unable to obtain bank funding.

Refund was placed into administration on October 14.

Property investment coach and mortgage broker Paul Giezekamp says the Refund Home Loans business is history.

Property Observer contacted Refund Home Loans and Ormond but has received no response.