Don and Janine McLachlan remember the exact moment that marked the start of the end of the financial security they spent a lifetime building for their family.
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It was late 2013, they were sitting in the upstairs lounge room of their Merewether home.
Funda director Nathan Wright was there to discuss providing money for the start-up, and the McLachlans agreed to loan $50,000 to the Merewether-based non-bank lender.
As per usual, Mr McLachlan, who grew up in Sydney but spent most of his life in the country, said he trusted the bloke.
They'd known each other for several years through Merewether Surf Life Saving Club.
"Being from the country I take people on face value," Mr McLachlan said.
"Some people think it's a failing, but it's the way I am."
A few years earlier the now 70-year-old retired mine manager moved to Newcastle to take up a job with coal company Glencore.
He was alone, and he knew no one.
Mrs McLachlan was still working in Mudgee, so he joined Merewether surf club to meet people.
"I just did my bronze because I've played sports all my life," Mr McLachlan told the Newcastle Herald.
"I came over here on my own to start with. For me, I've found that sports clubs are the best way to meet people.
"So, I went down there, and I thought I'd do my bronze, because I always loved the ocean and diving."
It's where he met Mr Wright and Mark Owen, who would go on to start Funda in June 2013.
But for the dozens of Funda and related company Collaborating creditors, owed at least $13 million, things now look nothing but grim.
The companies' debts range from the McLachlans' $3.6 million all the way down to $528 owed to a printing shop.
According to the directors, there was only $109.80 and $46,107 in Collaborating and Funda's bank accounts respectively when the companies collapsed.
It's a long way from the $10.5 million loaned to Funda and Collaborating, by people and their super funds, to be used to provide loans to small businesses.
"We gave him $50,000 as the first loan and then it just slowly built up, and eventually it was $3.6 million," Mr McLachlan said.
"I met them in the surf club and it's fair to say there is a fraternity in the surf club.
"There is a real brotherhood in surf clubs."
Mr Owen was until recently the treasurer of Merewether surf club.
Mr Wright was a club member of 15 years and former rescue boat captain.
When they moved to Newcastle, the McLachlans were eyeing retirement and looking for a way to generate an income stream.
They had spent years completing a small subdivision in Mudgee to build up their cash reserves.
"We've worked hard for everything we have," Mr McLachlan said.
"I've never been given a brass razoo and I've been a pretty sharp businessman, so to fall over at the end like this, it's just heartbreaking.
I've never been given a brass razoo and I've been a pretty sharp businessman, so to fall over at the end like this, it's just heartbreaking ... there wouldn't be one night that goes by that I don't wake up thinking about it
- Don McLachlan
"It's soul destroying and I blame myself.
"I wake up every night, there wouldn't be one night that goes by that I don't wake up thinking about it."
To compound the insult, Mr McLachlan recalls trying desperately to pull the couple's money out of Funda in 2020.
Coronavirus had hit.
No one knew how long the shutdown would last.
Mr McLachlan was concerned about the economy and wanted to put the money in the bank.
He spoke to Mr Wright and was told Funda could not pay it back "right now".
"In hindsight when I asked for my money in 2020 and they couldn't pay it, I should have pushed to have the whole thing wound up then," Mr McLachlan said.
"Maybe we'd have all gotten our money back and everything would have been fine for everyone."
Fearing the worst, the McLachlans issued Funda with a 90-day notice to pay by June 2020.
In an email in March 2020, Mr Wright acknowledged receipt of the claim.
"I completely understand your request due to the uncertain nature of the events unfolding and general market sentiment ...," he wrote.
"Currently our portfolio is performing well but it is not an easily liquidated asset, that combined with these unprecedented times will present many challenges, I'll keep you advised further as things progress."
But the McLachlans' money never arrived.
Once the couple realised Funda couldn't pay, they felt trapped.
"I'm cornered now, I'd asked for my money back and was told I couldn't get it, so I was cornered," Mr McLachlan said.
"The first of every month I was shitting bricks because I was wondering if the interest payments were going to be there.
"It was eating me up and I was not sleeping for a long, long while, because I felt very responsible for my wife, my family, everything."
At an impasse, the couple took the only way they could see forward.
"They proposed an agreement, and I gave them three years, but I still wanted to get the first cent that came out free," Mr McLachlan said.
"I wanted it, and we wanted out.
"And as it turns out, now we've learned that a lot of other people got paid out money before we did."
When asked if Funda was insolvent as far back as March 2020, Mr Wright said "there's a lot of technical technicalities around insolvency".
"The business, the assets in the business are wrapped up in loans, not a box of cash in the cupboard," Mr Wright said. "And I did tell Don at the time, particularly with the uncertainty of what was going on with the pandemic, that we were unable to repay that and negotiated with him to hold off, and he agreed.
"And that was the end of it.
"So, when someone agrees to continue and not enforce their debt, well, it's not insolvent."
Mrs McLachlan said at the time they did not know any of the other lenders and thought they were doing the right thing allowing Funda more time to pay.
They continued to receive regular updates on how the business was travelling via monthly phone calls between Mr McLachlan and Mr Wright.
In December 2021, an email from Mr Wright gave them confidence that despite the pandemic things at Funda were on track.
"Through the many ups and downs of 2021 our loan book has held up well, mostly due to our risk and credit profile along with the diversification across industries and geographical locations, whilst being supported with the excellent customer service that our team strives to provide, which is evident by one of our best attributes being repeat business from our client database," Mr Wright wrote.
"Our only real issue this year has been volume, or lack thereof, of new client originations due to a number of factors, but mostly the lack of quality inquiries to match our risk appetite."
Six months later, however, it was the beginning of the end.
In a July 2022 email, Mr Wright detailed the extent of the trouble Funda was in.
"As I've alluded before, we have been facing heavy head winds for quite some time now with the business, and against some other advice I have persevered and will continue to work towards a satisfactory outcome for all stakeholders," Mr Wright wrote.
"We have cut back in a lot of areas where possible, but it's a fine line between being able to operate and grow, which is required, or cut back and suffer.
"With a combination of the last couple of years COVID-related impacts and legacy bad dealings from many years ago, our debt to equity, not to mention profitability, is upside down.
"We have worked towards many options to move forward, as it is the only way out, but come up with nothing suitable as yet ..."
Mr Wright went on to propose that lenders consider converting some of their debt to equity or reduce the interest payments they were receiving to keep Funda operating so the directors could work towards a merger or sale.
According to a discussion paper circulated by Mr Wright in April last year, which detailed Funda's performance since 2016, the business reached its peak in 2019.
That year it wrote 180 client loans, valued at more than $9 million.
The company's loan book was estimated to be worth $12 million.
By the following year, the loan book value started to drop.
It's understood it is now up for sale for $570,000.
"So, the $10.5 million people put in has now gone down to a marketable value of $570,000," Mr McLachlan said.
"I think all of us can probably see that there's very little money left in these companies. I would like to know how the $10.5 million was lost.
"That's the crux of it really, how did this all happen?"
When questioned about the liquidations, Mr Wright and Mr Owen said they too were victims.
Both men blame the collapse on the pandemic and the broader economic conditions facing Funda, pointing to competitors that are also struggling.
Mr Wright said while there had been "plenty of rumours and innuendo", there was "nothing to hide".
"I can't get sucked into that stuff," Mr Wright said.
"We'll just go with the facts and what the numbers are."
- Do you know more? Email donna.page@newcastleherald.com.au
