Martin Lee @ Sg
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More Bad News for EcoHouse Investors

Following the news of the closure of the EcoHouse Singapore office, news has emerged that creditors of the UK office will be meeting to do a voluntary wind-up of the company. The meeting of EcoHouse creditors is set to take place next week.

Creditors requiring further information may apply to John D Travers & Company, First Floor, 58 Hagley Road, Stourbridge, West Midlands DY8 1QD, Telephone: +44 (0) 1384 374000.

ecohouseIf you are an EcoHouse investor, you might want to check whether your contract is with the UK or Brazilian office.

It was also reported in Business Times that some Singaporean investors are planning to do a class-action suit against EcoHouse.

Personally, I think it’s going to be a waste of time and money.

Lawsuits will only work if a company is solvent and wants to continue running its business. If a company is insolvent, you might end up getting very little or nothing even if you were to win a lawsuit against it.

Just look at what happened to Profitable Plots investors who also tried to initiate a class-action suit.

But when investors are looking at a total wipe-out of their capital, I guess they will try anything. Eventually, reality sets in and they will have to stomach the losses and move on.

This is one of the pitfalls of investing in an overseas development. If something goes wrong, recourse options are limited.

Some people might say that the investors should have no complaints as they went in with their eyes open.

This might be true to a certain extent but I feel that many people are not equipped with the necessary skills to evaluate such investments properly. And some of these skills can only come with experience.

Even when I was a naive investor many years ago, I had my fair share of being fooled and paid the price for learning the lessons.

It’s good thing that MAS will finally be regulating some of these products. Implementation will take a while though.

Leave a Comment:

Steve F says 9 years ago

Companies selling in Singapore must have a Singaporean or PR as a director. It’s seems to me reasonable that these people should take some responsibility for understanding the product they are selling and the claims they are making. Surely directors must take some responsibility for the fees they take.

xyz says 9 years ago

Even if it was a S’porean company, investors will also be wiped out & legally there is nothing that investors can do about it.

Also in S’pore it doesn’t matter whether the company is big & rich, or some fly-by-night setup. If anything goes wrong, your “investment” will also be wiped out — you die is your biz; you went in with your eyes big-big — according to S’pore law. Just look at DBS & Minibonds, and other similar investments during the financial crisis. Or the CLOB fiasco in the 1980s, or the shenanigans of small-cap shares on SGX.

Frankly you will be better protected if your buy your investments in the US from tried & tested companies. The only thing is their taxes and estate duties.

    Martin Lee says 9 years ago

    Dear xyz,

    Yes you are right, if an investment goes bust, even if it is in Singapore and it’s a listed company, the chances of recovery would be low.

    What I wanted to highlight was the additional risks of overseas investments in unregulated investments. You can’t see it and it’s hard to monitor regularly.

    If it was really so attractive, why would the locals not buy into them? Why does the company have to incur additional much expenses to market it overseas?

    There is also the additional risks of being a scam.

George Chia says 9 years ago

In 2011, i also invested in ECO house project in Brazil for 23,000Gbp and when my contract matured in Dec 2012, they kept delaying payment desptie my constant compliant via email and tel phone calls. So when Ecohouse decided to set up their singapore office(Suntec) in Feb 2012, i decided to up the ante by barging into the CEO office, Mr. Armstrong to demand my payment. As expected he gave me the runaround about the delays in the Brazil’s government payment for completed projects and that cause some cash flow problems. I threaten to raise this issue at their presentations so prospective and existing clients would know their dleays in payment. Maybe i was lucky and maybe i went in with all guns blazing, the next day, he TT the money back to me plus i charged them for all the Fx losses incurred due to the delay. in the end, i made more than the original 20% contract interest.
My naviety in investing in projects was due to the escrow arrangement. it sounded unique and safe but even their UK escrow lawyers i noticed went bust. Martin is right, overseas investment projects are extremely risky esoecially for projects that require more than a year till maturity.

    Martin Lee says 9 years ago

    Dear George,

    Thanks for sharing. Yes, your method might work if it is early days and a company is still in the process of trying to get investors. They can simply take other investors money to pay you off. Usually, sitting passively and waiting will end up with nothing back.

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