Banking royal commission: How a farming family lost everything after 45 years on the land

Comment by tonytran2015: This case (revealed by the Australian Royal Commission for Inquiry into Misconducts in the Banking and Superannuation Industries) shows how a real business can go bankrupt from over-expansion and from being pulled by its own financier.

via: https://mobile.abc.net.au/news/2018-06-25/family-with-multimillion-dollar-debt-after-farm-business-seized/9900886?pfmredir=sm

Harold and Barbara Cronin spent 45 years building their family’s farming enterprise on Western Australia’s south coast.
… In two short years, it was gone…

By 2010, the Cronins owned six farms under the company name Chambejo Farms, with finance provided by the NAB.

…As they worked to turn two blocks purchased in 2009 into profitable farms, … It was a troubled transition made all the more challenging by two bad seasons.
… Mr Cronin approached his local NAB branch and increased the overdraft on his account by 8 per cent to see through the poor seasons.

… the Cronins had assumed more debt.

August 2012, Mr Cronin received a phone call from the local NAB branch manager who advised that a red flag had been placed on his account.
In May 2013, … A representative advised that insolvency firm Ferrier Hodgson had been appointed by the bank as receiver managers
…(May 2013) Mr Cronin estimated his debt to the bank was $5.1 million.

…[NAB Agribusiness general manager Mr. Kahn Horne] Mr Horne said the appointment of receivers in May 2013 was based on financial default. A term loan had expired, and the overdraft was also overdrawn
The eventual breakdown of expenses added to the Cronins’ debt included about $704,000 in receivers and managers’ remuneration; $110,000 in legal fees and $297,000 for chemicals to manage weeds…

The Cronins lost their farms and their home [all six properties had been sold by the end of April 2015 for a total of $5.65 million], and were left owing $4.58 million to the National Australia Bank (NAB)…

… The NAB advised it did not intend to take any further action to recoup the money. The debt would effectively be written off.

2 thoughts on “Banking royal commission: How a farming family lost everything after 45 years on the land

    • Thank you, Ian, for re-blogging.

      These events can happen to any of us. The same bank has encouraged many of its customers to borrow to expand businesses at the wrong time, and may also terminate term loans, placing customers on substituting loans with higher interests. This makes many businesses fail.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.