Receiver Tony McGrath yesterday detailed the conditions leading up to the collapse of the non-bank lender, which went into receivership on October 25 owing $660 million to about 3000 investors.

It came as more than 1000 investors from across the state converged on four information sessions by receivers and managers of Bankisa Securities.

Mr McGrath said along with the impact of Banksia’s investments in property, McGrath Nicol was looking into the role played by auditors and directors of the failed company.

“This is week seven of the receivership and it’s early days,” Mr McGrath said.

“There are some issues I’m concerned about.”

Banksia had outstanding commitments to debenture holders of $663 million as of October 25 and had advanced 956 loans to individual borrowers totalling $527 million.

Mr McGrath estimated a total repayment to investors of between 50 and 65 cents in the dollar. 

“Our current view is that 65 cents is most likely the top end of the outcome,” Mr McGrath said.

“This is particularly difficult because the nature of the people exposed to the company are hardworking, country people who effectively dealt with Banksia as though it was their local bank.”

Mr McGrath said yesterday’s information sessions were designed for investors to meet the receivers and talk through the issues, following the release of their report into Banksia earlier this month.

He estimated total payments to investors would be 75 per cent complete by September 2013.

However, recovering the rest could be a longer process.

“That would leave us still to realise the harder part of the loan portfolio which may not be easy to sell, and also any claims we want to bring against directors and auditors,” he said.

“The harder assets will take another year or two.”

Mr McGrath said it was up to receivers to resolve the situation in the most efficient timeframe while maximising the returns.

Up to 1000 angry and desperate Banksia investors converged on two creditor information sessions in Ballarat yesterday calling for answers.

Extra chairs had to be  brought in to accommodate the swelling crowd as bus and car loads of investors and their family members continued to pour into the Ballarat Lodge.

Among them was a man unable to pay for his wife’s funeral, and another who described feeling “powerless” after losing a significant slice of his nest egg.

Banking and Finance Consumer Support Association president Denise Brailey said investors had walked out of the meetings “stunned”.

“They’re not coming out confident,” she said.

“They thought maybe it would take a year but now they’re getting the idea this could take six or seven years.”

Many of the people attending yesterday’s meeting were retirees.

Ms Brailey said in some cases, their only income had stopped suddenly.

“You’re telling all these people, who are predominantly elderly, that they’ve got no income,” she said.

“These people were only chasing one or two per cent higher than the banks’ rates. They believed it to be a bank.”

Ms Brailey was particularly concerned that many of the investors would not automatically qualify for welfare benefits.

Orford resident John Egerton said he had been left unable to pay for his wife’s funeral.

Mr Egerton said all of his money had been tied up in both Banksia and fellow regional non-bank lender Southern Finance.

“I’m waiting on some hardship money which I’ve applied for to try and pay for my wife’s funeral,” Mr Egerton said.

“We’ve just got to wait.”

Mr Egerton said he found yesterday’s information session to be “productive” but he remained unsure whether it would take months or years for payments to be completed.

“I’m hoping it’s going to be sooner rather than later,” he said.

Ballarat Banksia investor Neil Waters said he was more fortunate than many at yesterday’s meeting, because his nest egg was spread across many ventures.

While not a life-changing event, Mr Waters said he had lost “enough”.

“They’ve answered a lot of questions today but you’re really quite powerless,” he said.

Ms Brailey said a spokesperson for the receiver McGrath Nicol had answered a number of questions about Banksia’s operations.

“The actual borrowers were people the banks wouldn’t lend to,” she said.

Ms Brailey said she had contacted the Australian Securities and Investments Commission with concerns over the same issue in 2005.

She believes the investments of thousands of people could have been spared if, back then, action had been taken.

Ms Brailey said legal action remained a possibility.

“There’s a buzzing around the room that the auditors have to be taken to account,” she said.

rachel.afflick@fairfaxmedia.com.au