Failed Adelaide Event Group ‘likely’ trading insolvent since mid-2019, administrators say

An Adelaide event hire company was likely to have been trading insolvent for more than a year, administrators say.

Adelaide Event Group CEO Greg Evangelou. Picture: Bianca De Marchi. Picture: Tait Schmaal.

Creditors of Adelaide Event Group, which failed in December, will likely get less than 6c in the dollar if the company continues to trade and nothing if it is liquidated, its administrators say.

A report by Stuart Otway and Travis Olsen of SV Partners says they expect the company has been insolvent since May 2019, and “we believe an offence may have been committed by allowing the company to trade whilst insolvent’’.

Adelaide Event Group operates the brands White Marquee Event Hire, Renniks Hire and Budget Party Hire.

The administrators also say in the report “we suspect that the CEO (Greg Evangelou) may have been acting in the position of a shadow director’’ since 2017, which could open him up to prosecution and render him liable for a claim from creditors.

SV Partners, in a 95-page creditors’ report, says if a deed of company arrangement, put forward by the company’s director, is accepted, creditors, which are owed between $4.9m and $5.5m, would get 5.27c at the high end and 2.33c at the low end.

Nicholas Evangelou, Greg Evangelou’s father, is the company’s sole director. The administrators say Nicholas Evangelou has had a terminal illness since 2017. However the company’s accountants believe that while his involvement was then reduced, he remained in effective control.

Adelaide Event Group CEO Greg Evangelou. Picture: Bianca De Marchi

The administrators indicate they believe Greg, who was a bankrupt from early 2017 to early 2020, may also have been acting as a director.

“From our preliminary investigations, we suspect that the CEO may have been acting in the

position of a shadow director from the time of the director’s diagnosis, however, we have not

formed a conclusive view in the limited time available to us,’’ SV Partners’ report says.

Greg Evangelou told News Corp Australia that he was not acting as a shadow director and he had been in business in some form with his father since 2006.

He also said the company had not been trading insolvent.

“I wasn’t a shadow director … I think it’s very clear that I never have been,’’ he said.

Greg Evangelou was declared bankrupt in 2017.

Prior to that he was a director of Budget Party Hire, which was placed in liquidation in 2015 with $1.4m in debt, including $575,000 owed to ANZ and $224,442 owed to the Australian Taxation Office.

“The CEO was formally bankrupt for the period 3 January 2017 to 4 January 2020. The CEO was therefore disqualified from managing a corporation pursuant to Section 206A of the Act during the period of his bankruptcy,’’ the creditors’ report says.

“Should a liquidator establish that the CEO was acting as a director of the company during this time, he will have committed an offence under this section.’’

Budget Party Hire Pty Ltd was liquidated and then deregistered in 2017.

Adelaide Event Group owes $2.17m to secured creditors, about $1.8m to the Australian Taxation Office, about $915,000 to Revenue SA (which is being disputed), $355,387 to trade creditors and $166,937 to employees.

The $2.17m in money owed to secured creditors is owed to the company’s two shareholders, the report says.

Most of the money owed to employees is accrued annual and long-service leave, with about $11,000 in superannuation also owed.

The company employed 23 permanent and 15 casual staff when the administrator was appointed, with a further 50 who worked at events.

Revenue SA has also lodged a claim for $914,777 in unpaid payroll tax, to which the company has lodged an objection, saying a contractor it used should have paid the funds.

The administrator said if the company could establish the relevant amounts owed were paid to the contractor, the objection “may have a strong prospect of success’’.

The administrators report also found that:

• “The company ceased to lodge BAS returns from October 2018 and no payments were made after this time, however, the company’s financial statements appear to accrue the debts owed to the ATO.
• “The company had not complied with its obligations to pay payroll tax from the financial year ended 30 June 2016 onwards, although as noted … there was a dispute regarding the company’s liability up to and including part of the financial year ending 30 June 2018.’’

The administrator said five parties had approached it to buy the business but discussions had not progressed nor had it been advertised for sale while other matters were resolved.

Mr Evangelou has previously said the company lost almost all of its revenue due to COVID-19 shutdowns and he was confident it could have traded out of its financial difficulties if the pandemic had not struck.

A creditors’ meeting will be held on Monday next week.