Jon Adgemis peace deal in doubt as his bankruptcy proceedings drag on
Repeated delays putting out Sydney pub baron Jon Adgemis’s $1.8bn debt inferno could undo an earlier peace deal in part of his business empire.
A $7.7m peace deal holding together a key part of Sydney pub baron Jon Adgemis’s former empire is at risk of falling over as repeated delays to a vote that could spare the businessman from bankruptcy frustrate his creditors.
One of Mr Adgemis’s backers Archibald Capital is due to convert a $6.7m note to cash by September 30, as part of plans laid out in January this year to settle debts tied to his former company Public Lifestyle Management.
However, an unresolved personal insolvency proposal put forward by Mr Adgemis after the repeated intervention by the Australian Financial Security Authority now leaves Archibald Capital struggling to refinance and secure cash to support the pub baron.
AFSA blocked a ballot deciding whether creditors would accept Mr Adgemis’s offer on August 29, taking issue with the rigour of investigations into his financial affairs, and the 0.15c in the dollar tabled on debts which could top $1.8bn.
Mr Adgemis’s potential bankruptcy comes after he amassed an empire of 22 pubs and hotels across Australia funded by a torrent of credit from private lenders and investment banks.
Bankruptcy creditors are set to meet for a third time on October 9 to vote on a deal.
But the delays come at a cost to creditors, too.
Speaking at the meeting on August 29, Archibald Capital boss Ben Madsen warned the delays meant he was “significantly impacted”, as plans to lower the interest rate on a $250m debt pile were held up.
Mr Madsen had agreed to support Mr Adgemis’s January debt deal for Public Lifestyle Management under an arrangement that averted liquidation.
Public Lifestyle Management had acted as an operating company for several of Mr Adgemis’s former venues before they were seized by another lender, Muzinich, after a dispute with the Andrew Tan-led private lender.
BDO administrators were appointed to Public Lifestyle Management, yet Mr Adgemis secured creditors’s approval to avoid liquidating the business by offering $1m cash with the promise of a further $6.7m by the end of September.
This additional cash was to go to creditors.
Negotiations are underway to extend the deadline for the cash contribution from Archibald Capital.
However, if this fails, BDO is required to call a creditors meeting to terminate Mr Adgemis’s Deed of Company Arrangement. This outcome would see Public Lifestyle Management liquidated and trigger an investigation into the company’s financial affairs. BDO had earlier raised allegations of trading whilst insolvent.
BDO administrators also questioned a $9m sum of cash withdrawn from the company.
Public Lifestyle Management slipped into administration owing at least $34.2m to 1157 creditors, many of them staff.
Mr Adgemis’s future may depend on those same creditors supporting his bankruptcy application.
In the interim, Mr Adgemis has handed control of his remaining business empire to his former KPMG colleague and brother-in-law Rodd Boland.
Mr Boland, who did not respond to attempts to reach him, was made director of 28 companies on June 20, the same day Mr Adgemis signed the papers to engage bankruptcy trustees.
Under a personal insolvency agreement, Mr Adgemis cannot be director of a company.
Mr Boland also appears as a director of several other businesses linked to Mr Adgemis over which the former KPMG special adviser had taken control on September 18.
Mr Boland is married to the pub baron’s sister Despina Adgemis.
Sources said Mr Boland was key to Deutsche Bank’s financial backing needed to finish five of Mr Adgemis’s pubs and hotels.
Mr Boland and Ms Adgemis previously lived at a house in Conway Avenue in Rose Bay co-owned by Mr Adgemis and his mother Rose Adgemis. That six-bedroom property was seized in July, with a long list of lenders and suppliers placing caveats on the property for unpaid debts.
Mr Adgemis’s family is key to plans to get his bankruptcy over the line, with his mother and sister Christine Adgemis offering to stump up $3m in cash to bolster returns to creditors.
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Originally published as Jon Adgemis peace deal in doubt as his bankruptcy proceedings drag on
