Jon Adgemis faces ATO bankruptcy bid over $154m tax debt
The ATO has muscled its way into bankruptcy proceedings against the Sydney hospitality tycoon, who owes an eye-watering $1.8bn to creditors.
The Australian Taxation Office has succeeded in its bid to insert itself as key petitioner in an attempt to bankrupt Sydney pub baron Jon Adgemis.
The tax office’s case was heard in Sydney on Monday after it filed papers seeking to seize control of the bankruptcy application relating to Mr Adgemis’s failed hospitality empire on September 16.
Mr Adgemis owes the tax office $154m in director penalty notices — not withstanding further debts north of $1bn — the court heard.
“There is no dispute about these debts. On any view Mr Adgemis owes a very large sum of money to the Deputy Commissioner of Taxation,” a barrister for the tax office said.
The penalties relate to five companies, the court heard.
Federal Court judge Elizabeth Raper ordered the ATO be listed as the application petition creditor.
It means Mr Adgemis’s former backer, Richard Gazal, who had originally brought the bankruptcy application, will be swapped out and replaced.
Mr Gazal’s lawyers did not object to the tax office taking over the application.
Mr Adgemis did not appear in court and remained at a residential address in Sydney, the court heard.
The decision likely scuttles any attempt by Mr Adgemis to avoid bankruptcy, with debts running as high as $1.8bn by some estimates.
Mr Adgemis also won his request to delay the actual hearing of the application, which was also scheduled for Monday.
He had wanted an extension to prepare his evidence for a hearing on October 6, but Justice Raper agreed to this Friday, October 3, instead.
“It is not without significant costs and resources that we are trying desperately to give your client some further time,” Justice Raper said. “Perhaps you are unaware of how limited the court’s resources are,” she said.
Justice Raper admonished Mr Adgemis’s barrister for pushing her to delay the hearing until October 6, and threatened to reconsider the extension to this Friday.
Mr Adgemis, through his barrister, argued he should be allowed the extension because his solicitor did not have enough time to investigate the allegations contained in evidence served on him on September 18.
But, the tax office’s barrister, Daniel Krochmalik, opposed Mr Adgemis’s request for a time extension and said in effect none of the allegations contained in the material served on him should have been a surprise.
He said Justice Raper would not have to determine if he engaged “in insolvent trading”, or committed “any offence” and further that “these are the types of allegations that have been raised in reports by administrators” already.
A barrister also appeared for the Australian Financial Security Authority and opposed Mr Adgemis’s request to push out the hearing.
“There are significant concerns with (Mr Adgemis’s) personal insolvency process,” the court heard.
“Continuations of his (Mr Adgemis’s) lifestyle seem to continue unabated.”
The inspector-general of bankruptcy also said there are “significant debts” worth some $1.8bn.
The pub baron, who assembled an empire of some 22 pubs and hotels across Sydney and Melbourne, had offered his creditors a paltry 0.15c in the dollar return.
He had been seeking to broker a peace deal, offering to give up assets along with a $3m cash contribution funded by his sister.
The Australian Financial Security Authority has also taken aim at Mr Adgemis’ bankruptcy offer, warning WLP Restructuring trustees — who are overseeing the process — investigations into the pub baron’s assets had been inadequate.
The ATO has been pursuing Mr Adgemis over debts owed by his companies.
The tax office has lodged debt claims of at least $162m against Mr Adgemis personally.
But, documents reveal the ATO estimates his companies may owe more than $300m to the tax man, with much of the debt allegedly representing fraudulent GST refunds.
The ATO had been seeking to replace Mr Adgemis’s former backer Richard Gazal, who first launched the application to bankrupt Mr Adgemis earlier this year.
Mr Gazal was among a legion of backers and funders who had supported Mr Adgemis’s attempts to assemble his property empire.
The former KPMG deals partner had attempted to engineer an uplift of unloved pubs.
His Public Hospitality Group operation would buy off-Broadway venues, refreshing the sites and often adding improved dining and accommodation options to the buildings.
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Originally published as Jon Adgemis faces ATO bankruptcy bid over $154m tax debt
