Bendigo and Adelaide Bank and Timbercorp Finance are being hit with waves of letters from investors refusing to pay principal and interest on loans taken out to finance investments in managed investment schemes.The potential financial impact on Bendigo and Adelaide Bank is starting to filter through to the analyst community. The banking analysts at Merrill Lynch wrote in a recent report that Bendigo's earnings could fall by 90 per cent if half the $615 million in loans to Great Southern MIS investors were written off.The Merrills' analysts questioned how a bank could have 4.5 per cent of its non-housing loan book exposed to one entity. Bendigo has appointed the Perth office of lawyers Allens Arthur Robinson to ensure the loans are repaid and, if necessary, it will move to bankrupt any of the 8200 investors in the Great Southern projects that renege on loans.But Ron Willemsen from solicitors Macpherson + Kelley said there are very strong grounds for the loans to be declared void and unenforceable. If that action is successful nothing further will have to be paid to Great Southern Finance or Bendigo and Adelaide Bank.It is claimed that the actions of GSF rendered the loan transactions unlawful either on its own behalf or on behalf of Bendigo and Adelaide Bank.Secondly, the investors are seeking to recover money they put in either from their own funds or under allegedly invalid loans.Willemsen says he has 600 Great Southern clients who owe about $45 million, which is being contested.Business Spectator