ISG, Lion, Mayflower; the investor burnt in three failed investments and how to avoid the same traps
Losses totalling almost three quarters of a million dollars, following the failure of three large and seemingly genuine property development investment enterprises, left Andrew Lim poorer but well placed to advise others on the pitfalls to avoid and glossy brochures to throw away.
API Magazine has in recent weeks and months extensively covered the collapse of the property and development investment enterprises, Lion Property Group and ISG.
An investor we spoke to has endured the grim misfortune of not only investing hundreds of thousands of dollars into those two ventures, but also committed a large investment into a third scheme by Mayflower Capital, from any of which he is doubtful of ever seeing a return of his money.
Andrew Lim, of Victoria, is among tens of thousands of investors who are looking increasingly unlikely to see investments, which sometimes amounted to life savings, refund their initial contribution let alone deliver any actual returns.
“Across three projects, I committed more than $720,000; $400,000 in ISG’s The Mill Norfolk project, $150,000 in Lion Property Group’s 28 Peerless Avenue, and $170,000 in the Mayflower Capital scheme.
“All three are now in collapse, investigation or liquidation.”
Mr Lim, whose advice on how to avoid such problematic investments follows below, said he thought he had carried out the necessary research but came drastically unstuck regardless.
“Australia’s property investment landscape is crowded with glossy information memoranda, shareholder agreements, and confident projections.
“Two structures dominate this space: Special Purpose Vehicles (SPVs) and Redeemable Preference Shares (RPS).
“On paper, they promise ring-fenced risk and ‘priority’ returns but in practice they can leave investors dangerously exposed.”
SPV and RPS: potentially costly acronyms
Australia’s property market, with median house prices soaring to $1.5 million in Sydney, tempts investors with structures like SPVs and RPS, promising tax efficiency and risk isolation.
SPVs pool capital for developments, shielding personal assets, while preference shares offer priority returns, attracting those seeking stable income.
Yet, these tools conceal significant risks—mismanagement, regulatory breaches, and liquidity traps can devastate portfolios.
In 2024, property-related investments contributed $80 billion to government revenue, according to the Australian Bureau of Statistics, but poorly structured SPVs led to high-profile failures, leaving investors with substantial losses.
The Australian Securities and Investments Commission (ASIC) warns of inadequate disclosures and governance lapses under the Corporations Act 2001.
RPS are shares that a company can buy back from investors on predetermined terms, often at a fixed price and time, or at the company's or shareholder's option. Similar to a loan, they typically pay a fixed dividend in priority to ordinary shareholders and are used by companies as an alternative to debt financing.
Why SPVs and RPS can fail investors
SPVs: Light on back-up funds
SPVs are lean entities, typically holding only project-specific assets like land and intercompany loans, designed to start and end with a property development.
This structure isolates risks, protecting investors’ personal assets while enabling pooled funding for projects like apartment complexes.
In Australia, SPVs are governed by the Corporations Act 2001, ensuring limited liability, however, their minimal capitalisation becomes a liability when projects stall—due to construction delays, market slumps or mismanagement.
Without surplus funds, SPVs cannot cover losses, leaving investors with claims against a shell entity.
In 2024, Brisbane-based Monthly Baron Pty Ltd, which is intertwined with Mayflower Capital in which Mr Lim invested, entered receivership, collapsing a $10 million townhouse development in Aspley. Investors lost $4.2 million as the SPV held no surplus assets beyond a stalled site, with secured creditors prioritised (ASIC Form 546, 2024).
Reported mismanagement and cashflow shortages left equity investors with minimal recovery, underscoring the need for rigorous due diligence on SPV governance and project financials to avoid losses in Australia’s volatile property market.
RPS: misleading priority
RPS are marketed as a hybrid investment, offering fixed returns (typically 10–12 per cent in property ventures) and priority over ordinary shareholders.
In Australia, they attract investors seeking stable income from developments, however, in insolvency, RPS rank below secured creditors under the Corporations Act 2001, making redemption contingent on available funds.
The 2023 liquidation of Mayflower Capital Pty Ltd illustrates this risk. Its $15 million commercial property fund in Sydney, funded via RPS, collapsed, leaving 200 investors with a $12 million shortfall.
Secured creditors recovered 80 per cent of their $10 million loan, while RPS holders received nothing due to depleted cash reserves (ASIC Liquidation Report, 2023). Overleveraging and market downturns exposed the “priority” myth. Investors must scrutinise redemption terms and project viability to avoid such traps.
Andrew Lim’s three failed investment case studies
Mr Lim detailed to API Magazine exactly what transpired with his failed investments and went on to list the six red flags that each company had waved, and what needs to change to prevent others from falling prey to these nefarious operators.
Case Study 1: ISG — The Mill Norfolk Project ($400,000)
“I invested $400,000 through ISG’s Real Estate Equity Fund in the Mills Norfolk Estates class, attracted by an SPV structure and RPS with a defined return profile.
“In September 2024, the Supreme Court of Queensland appointed receivers to ISG’s property schemes. By December 2024, the responsible entity was in liquidation. In January 2025, the Federal Court ordered the winding up of multiple ISG project companies, including entities linked to The Mills Norfolk.
“The liquidators advise that any recovery depends on tracing funds, realising assets, and potentially funding litigation—none of which guarantees a return. Investors remain in limbo, their capital trapped in insolvent SPVs.”
Case Study 2: Lion Property Group — 28 Peerless Avenue ($150,000)
“In October 2022 I invested $150,000 for Class A Redeemable Preference Shares in 28 Peerless Avenue Pty Ltd, marketed with a 12 per cent annual return and a buy-back on completion or at 36 months.
“On 6 August 2025, the Supreme Court of Victoria ordered the winding up of Lion Property Group Pty Ltd, 28 Peerless Avenue Pty Ltd, and more than 20 related SPVs; KPMG were appointed liquidators.
“Findings reported to the Court included: (1) approximately $122 million raised from around 600 investors across multiple SPVs; (2) consistent issuance of Class A RPS with fixed returns and buy-back clauses; (3) marketing assurances that funds were ring-fenced per project; but (4) in practice, pooling and sweeping of funds, leaving SPVs with negligible balances at collapse.
“The liquidators also identified indicators that the group may have operated an unregistered managed investment scheme.”
Case Study 3: Mayflower Capital ($170,000)
“My third loss—$170,000—was invested via Mayflower Capital Pty Ltd and a related entity, Mayflower Capital Victoria Pty Ltd.
“Investors were presented with successor branding and a sense of continuity.
“Official records show Mayflower Capital Pty Ltd (ACN 624 349 588) was deregistered on 10 July 2022, with its ABN cancelled on 22 July 2022. Meanwhile, Mayflower Capital Victoria Pty Ltd continued, issuing updates and holding an annual general meeting on 5 September 2023 at which shareholders: (1) recorded the resignation of director James Attwood; (2) elected Craig Cameron as director; and (3) passed a special resolution to change from a public to a private company.
“The FY2022 signed financial statements for Mayflower Capital Victoria showed thin retained earnings, significant related-party balances, and limited tangible asset backing—hardly the robust “governance and structure” promoted to investors.
“After board changes, communications with investors deteriorated. Email addresses used for investor relations changed or went unanswered, making it difficult to contact principals or obtain straight answers.
“Several investors observed material discrepancies between historical and later signatures on certain documents. While this requires forensic review, the irregularities deepen concern.
“Combined with resignations, a shift to private status, and communication cut-offs, the picture resembles phoenix-style tactics—entities wound up, liabilities abandoned, and accountability evaded.”
This isn’t “bad luck”—it’s structural risk
Across ISG, Lion, and Mayflower, Mr Lim said common red flags repeat, including:
- SPVs with minimal capitalisation and rapid wind-ups when projects stall.
- RPS that function like equity in insolvency, leaving investors behind secured creditors.
- Pooling or sweeping of funds across entities, contrary to ring-fencing assurances.
- Opacity and churn: deregistration cycles, board resignations, and shifting emails that frustrate contact and oversight.
- Potential regulatory breaches, including unregistered managed investment schemes.
“These features reflect systemic weaknesses in how property investments are structured and marketed—not merely a run of bad luck,” he said.
What needs to change
Mr Lim said Australia cannot allow property schemes to operate in a regulatory twilight.
“Reform must shift the balance from investor blame to director accountability, from post-collapse pursuit to pre-collapse prevention.”
He outlined six regulatory and legal changes he believed would minimise the risks presented to investors currently losing hundreds of millions of dollars per year to such flawed schemes.
- Plain-English, legally binding risk warnings: Information Memoranda should be required to state—boldly and unambiguously—that RPS may not be redeemed and will rank behind secured creditors if a project fails. Like cigarette packets with graphic warnings, glossy brochures must confront investors with the real risk, not “trust-building words” like governance or security.
- Mandatory cooling-off and legal advice: Investors should receive a statutory 10-day cooling-off period and a certificate confirming independent legal advice before committing funds. If consumer law protects small household purchases, why not life savings?
- Minimum capitalisation and director co-investment: Directors must commit meaningful personal equity. If they expect investors to risk retirement savings, they should risk their own funds first.
- Greater regulator powers: ASIC, the ATO, and the Federal Police should have authority to freeze assets early, disqualify directors swiftly, and prosecute those who use dummy directors—often non-English speakers placed as shields.
- Real-time oversight of cash flows: Regulators must require live reporting of SPV bank movements. Unauthorised pooling or sweeping of funds should trigger penalties and director compensation orders.
- Investor collective action rights: Isolated complaints are ignored. Statutory tools must enable investors to pool evidence, launch class claims, and access litigation funding so they can stand against well-resourced directors and advisers.
The questions that could save a fortune
SPVs and redeemable preference shares are not inherently improper, but they are structurally fragile and easily misused.
“My experiences with ISG, Lion Property Group, and Mayflower show how polished legal packaging can conceal weak capital bases, fluid cash movements, and governance failures,” Mr Lim said.
“Until reforms bring accountability and transparency, investors should approach such schemes with hard questions: Where is the real security?; Who controls the cash?; What happens if the project stalls?; and will I still be able to contact the people in charge when it does?”
