The receivers of failed Victorian debenture fund Banksia Securities have found more than $100 million in cash reserves, offering some hope to thousands of short-changed investors.
Banksia went into receivership two weeks ago owing $650 million to investors - many of them local retirees, farmers and community groups in Victoria's Goulburn Valley.
Deputy Premier Peter Ryan on Thursday announced there would be emergency funding for those most in need, though details have yet to be finalised.
"We think there is scope for working with the Commonwealth Government to do that should it emerge we have people in the absolute desperate circumstance," he said.
"Under no circumstances are we going to allow people to be in the environment that they simply don't have enough money to live day to day." In another glimmer of hope for the troubled community, Mr Ryan revealed more than $100 million had been found in Banksia cash reserves which will be paid back to investors as a first instalment.
"It is already apparent from Tony McGrath, the receiver, that all the money is not lost," he said.
"We have not lost 650 million, that is simply not the case.
"The organisation as I understand it has cash reserves in excess of $100 million, that money is available.
There will be a meaningful return of this money." Banksia's receivers have been briefing the State Government on developments and plan to hold a town meeting in Kyabram early next month to outline the first returns to locals.
'At a standstill' The Goulburn locals who have invested their life savings in Banksia say they are anxiously waiting to hear from the receivers about what happens next to the 40-year-old, home-grown financial group.
Retired dairy farmer Peter O'Shea says locals are doing it tough since the collapse.
"Some people haven't got any money, some people can't put food on tables, some people can't run their business, some people can't because all their money is tied up.
It's frozen so they're just at a standstill and they don't know what to do," he said.
To try to alleviate the panic, local authorities have set up counselling services at Kyabram's Community and Learning Centre.
What all investors have in common is they felt that by investing in Banksia, they were supporting their local community.
"Because they [Banksia] eventually invest in the country to employ people, grow businesses, grow farms, all sorts of things," Mr O'Shea said.
Many community organisations put their money into Banksia as well.
The aged care facility invested $3.5 million, sporting clubs deposited all their fund raising, even the Community and Learning centre now offering counselling had $50,000 in Banksia.
Kyabram Community and Learning Centre chief executive Sue Solly says the collapse of the locally trusted financial group came as a shock for the community.
"Banksia were a very community-minded organisation, they put a lot into the community as well," she said.
Greater protection Kyabram locals say they want more government safeguards to try to ensure something like this never happens again.
Unlike banks and credit unions, Banksia is a debenture fund with no government guarantees.
The head of the Australian Securities and Investments Commission's (ASIC) Banksia working group, John Price, says tougher regulation could help future investors.
"The sorts of issues you often see in this sector are probably playing a part in the problems with Banksia and those things are not having enough money upfront, problems with its cashflow and bad loans," he said.
"One thing the lawmakers could think about is, for example, requiring the people who run these businesses have a minimal amount of capital before they're allowed to start their businesses, like requiring minimal cashflows.
"It might require some really hard rules about managing bad debts."