Ralan had both a first mortgage and a second mortgage over its site at Paradise Resort. Both funders have been with Ralan for many years. Both funders were aware of the capital problems Ralan had as a result of the failure of its builder, Steve Nolan Constructions, in 2014. This included a loan for $3.5M to Steve Nolan Constructions as well as monies Ralan paid to unpaid sub-contractors so that the CFMEU would allow Ralan’s boycotted sites to be completed.
It would seem both lenders ought to have been aware Ralan was capital deficient in undertaking the Ruby project. Further it may be that both lenders ought to have been aware that Ralan was making up for the deficiency by operating an unlicensed debenture scheme.
Ralan required but did not hold a AFSL licence to issue debentures. In borrowing the deposits from the investors Ralan was issuing debentures.
It may be therefore that if the investors exercise their rights, as consumers of an unlicensed financial product, under s925A of the Corporations Act to rescind the loans to the Ralan Group that will enable the tracing of some or all of the monies to third parties, for example the first or second mortgagee, who did not act in good faith or without notice for the purpose of s925B of the Corporations Act. Depending upon what Ralan did with the money it may be possible to recover some of the money from the secured creditors.