Families of dozens of residents at an aged care centre in Melbourne's south east have been told there is little hope of recovering $4 million in bonds paid to the facility.

The previous owners of Mentone Gardens collected bonds from some families, some as large as $400,000.

The families also signed documents believing the fees were going into a trust and would not be touched while their relative resided at the home.

Mentone Gardens went into administration in June and its sale was confirmed late Monday. The new owners are not taking on the debt.

At the third creditors meeting at the Sandringham Yacht Club, administrator Mathew Gollant asked the 50 people present to approve a move to put the facility into liquidation.

In total, there are more than 30 unsecured creditors affected, with the vast majority being families who have placed relatives in care at the facility.

Bob Lorraine, whose parents live at Mentone Gardens, says he is pleased the facility will continue to operate under the new owners, but his parents have lost a lot of their savings.

"My father has lost $400,000 in bond money - or security deposit as the government calls it these days - and the residents have about $4.5 million in bonds, that's not the money they pay each year to stay there, that's just the money that should be held in trusts," Mr Lorraine said.

"It's gone. The administrator is quite clear that it's gone. He doesn't know where it's gone, it can't be found, that's the position as of [Tuesday]."

Fran Thomas is a family member who was at the creditors meeting.

"Very upset, very frustrated really, because it's the life savings of everybody," she said.

"We did get some answers, and obviously we're all pretty upset, we now understand the process better.

"My mum's 100 and she's lost $50,000, but some people in there have lost $450,000.

"I think our concern is that the Health Department, people who should have been following up, have not been following up.

"We want to make sure that the care stays right and we get the best chance to get our money back, but we're not optimistic.

"You just don't want it to happen to other people and I gather they've put in a new Act, but they're paper tigers and we're not the first."

State legislation 'obviously inadequate'

The company is called Parklane Assets and is owned by Gela and William Newitt, whose home address is listed in the exclusive Melbourne suburb of Brighton.

Mentone Gardens is a Victorian Government-regulated Supported Residential Service (SRS) providing respite and occasional care for the elderly.

The administrator has confirmed that 12 employees of the facility were sacked late last week.

They are among staff owed $40,000 in superannuation as well as other entitlements.

Families are demanding answers and want to know who was watching the sector as the home went under.

Peter Purcell, another one of the 50 people at the creditors meeting, says he thinks the situation reflects the regulations applicable at the time.

"There was no-one looking after these places. State legislation was obviously inadequate," he said.

"So the department wipes its hands of it and says, 'sorry, we've now got a new Act', but even under the new Act it doesn't appear from what they tell us that there's a lot of supervision."

The former owners have so far declined requests for an interview.

Government confident of new, 'tougher' measures

Victorian Health Minister David Davis says the State Government had put in place new arrangements from July 1, 2012 to rectify the problems that occurred prior to that date.

"As we understand it, the facilities are now in the hands of the liquidator.

"We understand there has been a weakness in the law which is why we have taken the step of putting these new arrangements in place.

"So that will help people into the future, but I understand this is very difficult for people who had arrangements entered into prior to the changes.

"The new arrangements give us the additional powers that are required. The new arrangements didn't come into place until July 1, 2012, so the earlier arrangements did not provide the same powers as the new structure."

Mr Davis says the sector is very complex.

"This is a sad situation and I certainly have a good deal of sympathy for people here. As I understand it ASIC is looking at this very closely, and ASIC has taken the step of supporting a liquidation process.

"I understand that ASIC has got a role into the future here, but certainly we're looking into how we can best regulate into the future.

"We're confident the new arrangements that are being put in place are much tougher than was there before."

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