The events that led to the collapse of embattled A-League club Perth Glory and its foiled sale deal will be laid bare after those controlling its affairs were slapped with a court demand for documents.
The club’s receivers KordaMentha and its governing body, Australian Professional Leagues, will have four weeks to hand over documents canvassing its finances under subpoenas issued with the Supreme Court’s approval on Tuesday.
Former Perth Glory owner Tony Sage.Credit: Paul Kane/Getty Images
The demand was pursued by creditor Kakka Enterprises as part of a bid to have Perth businessman Tony Sage’s company Okewood, which still counts Perth Glory among its key assets, liquidated.
Kakka, which is spearheaded by Perth businessman Kenneth Keogh, brother of former striker Andy Keogh, claims the entity is insolvent and wants to be paid out for its 3.3 per cent stake in the club.
But it’s an allegation Sage vehemently denies.
The quantum of that claim is not yet clear, but its filing in the Supreme Court indicates it would be in excess of $750,000.
The APL handed over certain assets within Okewood to KordaMentha in July, including the Glory’s licence, amid revelations it had been bankrolling its player and staff wages for five months via $4 million in secured loans.
KordaMentha has since been tasked with hunting for a new buyer, a process which has already been marred by a false start in the failed sale to Melbourne property tycoon Robert Brij’s Primeland Group-led consortium.
But lawyer Dan Butler, acting for Kakka, said the events that led the league to hand over control of the club and informed the “narrow” way in which receivers were appointed were still unclear.
He told the court Sage would not have all the data necessary to determine Okewood’s solvency because he was no longer in control or privy to information on its financial position, including the likely proceeds from the sale of its key asset.
Butler said he believed it was KordaMentha and the APL who were in possession of documents which would paint “the most fulsome picture” of Okewood’s affairs.
“I’ve never seen an appointment of this nature in my 12 years [practicing],” he told the court.
“The league has made an active decision, a conscious decision, to only appoint receivers over a subset of assets, and we say that must have been based on information they had at the time.
“Documents produced by the receivers responsible for a portion of this business show they have only identified assets within their control.
“The defendant does own other property not referred to within that report, and we say the APL may know what contribution that is making to the overall solvency of the company.”
A receiver’s report lodged with the Australian Securities and Investments Commission shows the company owes $39 million to creditors, the largest of which is said to be Okewood itself via a $33 million loan to the club.
But Butler argued that couldn’t be right as a matter of accounting.
He said he believed the position to be clear: the company was bust at the time of the appointment, it had debts of $39 million and its major asset had been incapable of being sold.
Sage’s lawyer David Vilensky told the court his client did not take issue with the subpoena push, but insisted he had given an undertaking to pay Kakka Enterprises when the sale was executed.
“We say there is a high level of insecurity or uncertainty as to whether the defendant is insolvent if they need to go down this path for information,” he said.
“Let them issue the subpoenas and see where that takes them.”
Justice Amanda Forrester issued the orders but expressed concern the matter was “dragging”, reminding Vilensky that Sage needed to comply with deadlines set by the court and not at his “whim or contention”.
Sage has been given 48 hours to give sworn testimony backing his claim the company is solvent and outlining his grounds of opposition to the liquidation, while the APL and KordaMentha have until mid-January to contest or comply with the subpoenas.
A final hearing is due to be held before June 2024.
The documents are expected to reveal fresh details about the events that led to the appointment of receivers and the failed sale deal, which receivers have remained coy about.
On Tuesday, Vilensky told the court not even his client knew the proposed purchase price and warned it could still be several months before the club is sold.
The APL has previously claimed licences issued for its expansion into Auckland and Canberra could go for up to $25 million.
But sources close to the deal have suggested the club would need a sustainable entity with deep pockets to take the helm, with an up-front payment and ongoing multimillion-dollar investment required.
Meanwhile, Sage is still contesting allegations of tax evasion levelled by the tax office, the Australian Criminal Intelligence Commission and the Australian Federal Police.
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