This is not the first, nor will it be the last time this has happened. I was warning clients off this one in late 2015. Palandri wines had a similar scheme late in their existence when they were strapped for cash and issued a 'Wine Bond' to raise money because the bank wouldn't lend to them. They went bust as well. You have to think about it in term of a business loan. The entity is raising money from investors and offering a coupon rate of return. What is the risk for that return? To be able to tell, you have to look at the business finances. You also have to ask, why are they sourcing high cost capital from the public? Why not the banks or other lending sources? If they are not willing to lend, why should you? I think people get too carried away by the lure of the product, not the hard facts of the finances.
