Western United granted ATO lifeline amid Scott Pendlebury court battle
Struggling A-League team Western United has been thrown a lifeline, as the court saga between Pies’ star Scott Pendlebury and former mate Jason Sourasis continues.
A last-minute deal has kept a struggling A-League team Western United alive, and left its star-studded list of investors with some chance of seeing a return on the tens-of-millions they have poured into the team.
Western United was granted the reprieve on Thursday, with the ATO accepting a payment plan for a $15.5 million tax bill.
Western United was run by Jason Sourasis, the former business partner and financial adviser to the team’s highest-profile investor, Collingwood star Scott Pendlebury, who has claimed in separate legal proceedings that more than $2.1 million was invested in the club without his knowledge.
As late as Thursday morning the ATO wanted to poleaxe the deal and wanted the club to be liquidated.
But Federal Court Justice Penelope Nescovkin ordered the club and the ATO into mediation, saying the deal was “the last chance” for anyone to walk away with anything.
Under the deal, Johnson Controls, the club’s major lender, would pay $15.5 m to cover the ATO debt.
A second backer, a company believed to be linked to billionaire Paul Lederer, the former chairman of Western Sydney Wanderers, would inject another $5m.
WMG also owes $1 million to the Victorian State Revenue Office, $120,980 to uniform supplier uniform supplier BRZ Apparel, $67,000 to marketing company Strange Animals, $873,000 to former Socceroo Steve Horvat’s now-defunct engineering firm Sava Engineering and $264,000 to Covellis Cleaning Company.
The club has tens-of-millions more in debt to unsecured creditors which will not be paid under the rescue deal.
But the deal means Western United has staved off liquidation, which would likely have seen those other out-of-pocket creditors paid nothing.
Liquidation would also have meant the club’s investors, including Pendlebury, former NBA player Dante Exum, tennis player Thanasi Kokkiniakis and Sourasis, would have walked away empty-handed.
Pendlebury observed some of the Federal Court hearing online.
The ATO was reluctant to accept the last minute deal, because the club was demanding it drop the court case before any money was handed over.
Barrister Mark McKillop, for the ATO, said his client had been chasing its money since January.
“There’s been assurances given since the middle of the year,” he said.
The deal means that Sourasis, a major shareholder in the venture, will have a chance to resurrect Western United, which was forced to sit out this A-League season after failing to pay players.
WMG still has $4.4m available in a loan from Johnson Controls, which was likely to be used to attempt to recruit new players.
The club has a deal with Wyndham City Council to buy 62.5 hectares of land in Melbourne’s west in exchange for building a stadium.
That was originally planned to be a 15,000 seat soccer stadium, but that has been altered to include a cricket oval and AFLW ground instead.
The site was fenced off this week, with signs warning against the dumping of rubbish at the land, about 45 minutes drive from Melbourne’s central business district.
The rescue deal marks the end of one of a string of legal headaches for Sourasis.
He is due back in the Federal Court on Friday where he is being sued by an investor in his nightclub, George Koularis.
He is also due in the Supreme Court, where Pendlebury is suing him for allegedly moving money into the club without his permission.
Sourasis is defending both of those claims, and has said emails showed Pendlebury knew his money was going into Western United.
Pendlebury had been a close friend of Sourasis before the pair fell when Western United began to flounder.
Western United described the outcome as a “positive step” for the club.
“It provides a clear pathway for the Club to reset as we move into the next phase of our future and our eventual return to the A-Leagues,” a statement read.
“We are deeply appreciative of the patience and support shown by our members, partners and staff throughout this difficult process.
“Further details on the direction of the Club and the broader project as well as additional comment will be shared in due course.”
