There has been an unlikely lifeline after an Australian bank with 140 employees, 6,000 customers and investors who had deposited $212 million collapsed.
A class action law firm is investigating an Australian bank that collapsed last week to see if they have a case on behalf of investors.
On Thursday, news.com.au reported: that digital bank Volt had stopped trading, leaving 140 employees and 6,000 customers out in the cold, as well as investors who had put $212 million into the venture.
Volt Bank Limited has been trying to raise $200 million since February but said the pandemic and the current challenging global economic environment had hampered those efforts.
The company’s eight board members voted to close the company because it hadn’t raised enough money to support its mortgage-writing plans.
It was a decision that left Volt co-founder and CEO Steve Weston “dismayed.”
The bank urged its customers to take $100 million in deposits and began closing accounts on Tuesday.
Volt, based in North Sydney, returned its banking license to the regulator on Wednesday.
But now Bannister Law is asking investors to reach out to help with their investigation of the embattled bank.
It also came to light on Tuesday that ANZ could offer the crumbling company a lifeline, with rumors circulating that the major bank is looking to buy its smaller counterpart.
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In a statement to news.com.au, Bannister Law said it “examined management’s conduct, forecasts and statements to investors in the company surrounding the company’s Series A – F equity financing rounds.”
The class action law firm added: “While investors had high hopes for the company, many could lose significant sums of money…
“Selling residual assets can generate returns for investors.”
bannister law Volt called on investors to register their details to aid their investigation so that they can “get a full picture of what happened”.
But at the same time as Volt may be faced with an impending lawsuit, hope may have sprung from an unlikely ally: ANZ.
the Australian reported on Tuesday afternoon that ANZ was in talks as it was considering buying Volt.
Obviously, Volt’s technology could be the reason for the major bank’s interest in the company, as ANZ’s proprietary technology isn’t that advanced.
In a statement to news.com.au, Volt said: “Volt is conducting a sales process through Rothschild & Co on a confidential basis.
“There are a number of parties that have shown interest, but we are not making any statements about that at the moment.”
In regards to the possible class action, the bank said it had received “no claim at all”.
News.com.au has contacted ANZ for comment.
Volt’s collapse goes beyond the workforce, the customers, and the investors; a debt collection company was also affected.
Collection House gave $8.5 million to Volt in its initial phase in January 2019 and used that investment as an asset to borrow against, according to Business News Australia†
As a result, when Volt went down, so did Collection House.
The initial injection of $8.5 million had fallen in value to $4.86 million by mid-2020. A year later, it was worth less than half of the original investment, at $3.5 million.
The debt collection company went into voluntary administration last Thursday and had large customers including Telstra and Westpac.
John Park, Ben Campbell and Kelly-Anne Trenfield of FTI Consulting have been appointed as third-party administrators.
Bannister Law is also investigating Collection House over concerns about its shareholders.
Volt was launched in 2017 as the first start-up to receive the banking license in January 2019 after the government wanted to increase competition in the sector.
The company wanted to raise $200 million, but was unable to do so.
It had previously raised $212 million in seven private rounds since its inception.
Most of Volt’s website is closed, with only an explanation and a list of answers to questions.
It said it had sufficient funds to return the customer’s funds and to quickly facilitate the transfer of funds to another bank account. Volt had increased daily transfer limits to $250,000, it told customers.
Australia’s financial safety regulator, APRA, said it will closely monitor the process to ensure funds are returned to Volt customers in an orderly and timely manner.
Volt CEO Mr Weston said: “I am heartbroken for our team and customers who have supported the company.
“It tears your heart out because we know we’ve built an excellent banking platform.”
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