InterContinental Sydney Double Bay Hotel co-owner Paul Fridman hit with bankruptcy as sale looms

The co-owner of the InterContinental Sydney Double Bay Hotel, Paul Fridman, has fallen into bankruptcy, just as the sale of the prestigious hotel is close to being finalised.

The high profile co-owner of the InterContinental Sydney Double Bay Hotel, Melbourne-based developer Paul Fridman, has fallen into bankruptcy, just as the sale of the prestigious five-star hotel is close to being finalised.

The world-renowned hotel, where INXS frontman Michael Hutchence died in 1997, has been the subject of a long-running legal battle between the embattled Mr Fridman and his business partner, Sydney-based Bilal El-Cheikh, of Piety Group.

But the bankruptcy stemmed from a separate court action taken in Melbourne by a former associate, Shane Kerbage, who was also backed by a high-profile architect claiming to be owed money.

Mr Fridman was declared bankrupt on August 8 but is yet to file a statement of affairs, according to documents obtained by The Australian.

Late on Thursday, Mr Fridman said he would appeal the bankruptcy. “We were not served appropriately and (we are) exercising our right of appeal.”

His bankruptcy trustees are Stephen Michell and Kylie Wright from PCI Partners, who declined to comment.

InterContinental Sydney Double Bay Hotel co-owner Paul Fridman.

Mr Fridman’s bankruptcy is understood to be separate from the Melbourne-based Fridcorp development operation where he no longer holds a senior management role, after he went it alone in teaming with Piety to buy the hotel for $178m from Chinese groups Shanghai United and Zobon Real Estate Group in 2021.

Mr Fridman effectively left the company two years ago to start his own operation, Fridman Developments.

Mr Fridman said later that year he had lured top restaurateur Maurice Terzini of Bondi’s Icebergs to take control of the hotel’s food and beverage department as part of plans to bring back the property’s grandeur.

But behind the scenes, events went awry at the 140-room hotel, with partners at loggerheads over their joint-venture agreement to develop the high-profile property from a glamorous hotel attracting Sydney celebrities into a luxury apartment development.

The InterContinental Sydney Double Bay.

In the court dispute, the pair swapped claims about expenses each had incurred and over Mr Fridman’s long stay in the hotel’s penthouse, which prompted claims of unpaid bills by his development partner.

Piety alleged that Mr Fridman stayed in the hotel’s penthouse, which charges $8950 a night, running up bills between January and May last year, for which he was invoiced but allegedly failed to pay. He has denied the size of the bill and paid the sum into his lawyer’s trust account, according to court documents.

Piety also alleged that in January 2022 Mr Fridman directed a hotel manager to transfer $600,000 from a shared business account without its approval. It said that in March Mr Fridman had directed the hotel manager to transfer a further $487,470. But he denied the claims and countered in the court case that Piety was in breach of agreements to joint venture on the hotel development

The origins of the bankruptcy case may stem from a much smaller property dispute.

A 2020 Victorian Civil and Administrative Tribunal case in which lender AET sought a possession order for a townhouse in Melbourne’s bayside Elwood revealed the once close ties the property tycoon had with the Kerbage family.

Double Bay five-star hotel has a storied history.

They had occupied a townhouse home owned by Mr Fridman since 2010 and knocked down a wall to a neighbouring property Mr Kerbage owned to create one large residence.

The Kerbages claimed to have been lending Mr Fridman money since the early 2000s which, although amounting to more than $1m by early 2010, had not been documented. They also paid Mr Fridman’s mortgage on the property and made deals under which a debt of about $3.35m was to be paid.

The sums are small compared to the size of the deals in which the tycoon said he was involved. Mr Fridman said in 2021 he was also venturing into private hospital development on two Melbourne sites, and had more than $2.5bn worth of diversified projects on his books including major apartment towers in Sydney’s suburban Hurstville and boutique developments in Melbourne’s Bentleigh.

Meanwhile, the Double Bay five-star hotel has a storied history but the property has attracted controversy for decades as a number of developers have failed in their attempts to overhaul it. At its height, the once world-famous hotel hosted celebrities such as Princess Diana. In 1997, singer Hutchence was found dead in one of the hotel’s rooms. It had also hosted Elton John and Madonna when it was then branded a Ritz-Carlton.

Originally published as InterContinental Sydney Double Bay Hotel co-owner Paul Fridman hit with bankruptcy as sale looms