Jon Adgemis $1.8bn bankruptcy vote delayed amid AFSA concerns

Creditors meeting to decide Jon Adgemis’s financial future have postponed a crucial vote on his personal insolvency agreement.

High-profile businessman Jon Adgemis in his Mercedes Benz AMG G63, currently worth around $260,000. Picture: Liam Mendes / The Australian

A vote deciding Jon Adgemis’s financial future has been adjourned to October 9.

Friday’s meeting of creditors to approve his personal insolvency agreement went ahead as planned, but ended without a resolution after his bankruptcy trustees decided to postpone the critical ballot.

Mr Adgemis owes $1.8bn but ahead of the meeting the bankruptcy regulator said it was concerned about the handling of his affairs and the investigations conducted by his trustees.

Documents circulated by WLP Restructuring trustees showed the Australian Financial Security Authority had threatened two years jail and or $39,600 fines for the overseers of Mr Adgemis’ fate.

Letters sent by AFSA warned WLP trustees Scott Pascoe and Benjamin Ho they had “not satisfied your statutory responsibilities in conducting an appropriate investigation into the Regulated Debtor’s estate or satisfied the communication standards which apply”.

The documents cautioned against holding a vote which could see creditors accept a deal, proposed by Mr Adgemis, under which they would receive 0.15c in the dollar.

AFSA national manager Neville Matthew warned the two trustees their action “necessitates the Inspector-General taking further steps to maintain the integrity of the personal insolvency system”.

“Despite the Inspector-General confirming the need for further investigation and additional

information for creditors, you have instead indicated the issues raised by the Inspector-General are immaterial to the creditor’s decision and you intend to put the personal insolvency agreement proposal forward for voting at the next creditors’ meeting,” Mr Matthew said.

ASFA voices concerns

Earlier this week the bankruptcy regulator also warned the methodology behind Mr Adgemis’s $1.8bn debt bomb may be flawed and questioned whether the Sydney pub owner had misled creditors.

A report, distributed on Wednesday, revealed ASFA’s anger with Mr Adgemis’s bankruptcy trustees and their handling of his financial affairs.

WLP Restructuring had however told creditors the meeting should proceed and that further delays risked runaway costs and offered little upside.

Jon Adgemis in Bondi on Thursday. Picture: Backgrid

In letters published by WLP’s trustees, AFSA takes aim at the latest report detailing Mr Adgemis’s liabilities, and its concerns that the businessman, who amassed an empire of more than 22 venues, may have made misleading disclosures about his assets.

A spokesman for Mr Adgemis said: ‘We have provided all the information required by the trustees. Any initial oversights have since been addressed voluntarily to the satisfaction of the trustees.”

AFSA inspector-general Neville Matthew said he was concerned trustees failed to “conduct appropriate investigations” into his finances.

Mr Neville, whose dramatic intervention put Mr Adgemis’s August 1 vote on hold, warned WLP it failed to meet requirements for “communication generally” and cautioned the bankruptcy overseers had a requirement to ensure their reports to creditors “not be misleading and not omit or obscure information”.

The second iteration of Mr Adgemis’s bankruptcy report revealed a nearly $300m escalation in money owed.

Private lenders bankrolled much of Mr Adgemis’s Public Hospitality Group empire, snapping up pubs, hotels and property across Sydney and Melbourne.

AFSA said that while trustees have accepted a proposal for his mother and sister to tip in $3m for creditors, which could see them get 0.15c in the dollar, they have failed to detail how WLP will ensure the family pays up.

“You have not addressed whether any security will be put in place,” Mr Matthew said.

As revealed in The Australian, Mr Adgemis first deliberated declaring bankruptcy in December last year, with his confidant, Olvera Advisers principal Damien Hodgkinson, referring him to WLP.

Former KPMG deal-maker Jon Adgemis, right, is set to face a vote on a $1.8bn bankruptcy on Friday. He is pictured with Peter Crinis, who previously ran the hospitality side of the business. Picture: NCA NewsWire / David Swift

The AFSA inspector-general also challenged the trustees’ claim that Mr Adgemis has been “unemployed” since 2023. The former KPMG deal-maker oversaw his ailing pub empire, which struggled to service its debts amid a tumble in valuations sparked by higher interest rates.

In response to Mr Matthew, the trustees say Mr Adgemis’s financial accounts show no wages earned since 2023.

AFSA warned the trustees they also failed to indicate “whether the regulated debtor has potentially made a false declaration in his statement of affairs, and considered referring the matter to the relevant authorities”.

False declarations can be punished with 12 months’ imprisonment.

Mr Matthew singled out how Mr Adgemis paid for a bevy of litigation with 10 cases before the courts disclosed by the trustees.

“You have not advised whether you have made any inquiries into how the associated legal fees were funded, nor whether the regulated debtor received any benefit from those fees,” Mr Matthew said.

“Taking this into consideration, the potential return to creditors may have been underestimated, which may prevent creditors from making an informed decision.”

Of the nearly $1.8bn in debt tied to Mr Adgemis, trustees said as much as $270m may be “duplicate claims” where funds have been double-counted.

Seventy-five per cent of creditors by dollar value must approve Mr Adgemis’s bankruptcy proposal, which would avoid him being made bankrupt and banned from running a company.

Letters from lawyers for Angas Securities, one of Mr Adgemis’s lenders, document concerns that nearly $480m of the tally represents interest and fees.

Charlton Rowley principal Luke Rowley questioned WLP over claims by Gemi Investments, another backer, asking whether the trustees allowed the Sydney lender to distort the voting “contrary to the underlying purpose of the Bankruptcy Act”.

Mr Rowley said there were many claims by creditors “who cannot, on any reasonable or conceivable view, have any genuine claim against the debtor”.

He pointed to Millinium Capital’s debt, which was recently refinanced.

Mr Rowley also called out Muzinich Asia Pacific, which lent on five of Mr Adgemis’s venues, where trustees said there was “nil” security “but wherein they hold security over some of the best assets”.

Mr Adgemis’s trustees also failed to note looming liquidator investigations for several companies where the pub baron has failed to provide statements of affairs, Charlton Rowley said.

Mr Rowley noted liquidators have raised concerns about “improper, unsubstantiated and potentially fraudulent GST credit claims” that are subject to ATO investigation and audit.

Mr Adgemis denies the GST allegations.

Originally published as Jon Adgemis $1.8bn bankruptcy vote delayed amid AFSA concerns