McKeon caught in chairlift legal spat

A bitter dispute between shareholders in the Arthurs Seat chairlift on Victoria’s Mornington Peninsula is headed for the courts.

The views from the Arthurs Seat chairlift

A bitter, multi-million-dollar dispute between prominent company director Simon McKeon and rival shareholders in the Arthurs Seat chairlift on Victoria’s well-to-do Mornington Peninsula is headed for the courts.

After the administrators of Arthurs Seat Eagle flagged they would sign a deed of company ­arrangement put forward by Mr McKeon, two other shareholders said through their law firm on Friday they would challenge the DOCA in the Victorian Supreme Court.

The aggrieved shareholders, who own about 25 per cent of the company, are former chief executive Hans Brugman and local real estate agent Robin Waterbury.

They are seeking $4.3m from Mr McKeon, who is a director of National Australia Bank and a former Macquarie deal-maker, and his billionaire friend Peter Gunn, a logistics and property magnate worth $1.54bn, according to this newspaper’s The List.

Mr McKeon and Mr Gunn, through his company PGA, are alleged to have given written ­undertakings last year to provide financial support to Arthurs Seat Eagle so it could pay all its debts in full.

“The going concern accounts were signed on that basis,” Arnold Bloch Leibler lawyer Jane Sheridan, on behalf of Mr Brugman and Mr Waterbury, told The Weekend Australian.

“The going concern accounts were signed (last October) on that basis.

“My clients’ claim is that, rather than honour that commitment, Simon McKeon and PGA are using the administration process to avoid it.”

Mr McKeon declined to respond, saying the court was the right place to adjudicate on the dispute.

Arthurs Seat Eagle went into administration last March, hit by COVID-19 and haze from the summer bushfires which interrupted sweeping views from the chairlift up the coast to Melbourne and beyond.

The business, however, never performed as expected, despite the four shareholders spending $20m on a comprehensive upgrade of the chairlift before its ­reopening in 2016.

The project was funded by shareholder loans, in proportion to their shareholdings.

By 2019, accumulated losses had spiralled to $6.3m from the 2017 financial year, with annual revenue $778,000 under budget last March when a majority of ­directors called in the administrators.

The nub of the current dispute dates back to last year when the auditor asked the shareholders to provide letters confirming their ongoing financial support for at least 12 months from the signing of the audit report.

The shareholders declined but agreed to extend the repayment date for their loans until June 30 this year.

The wildcard in the dispute is the content of further letters provided by Mr McKeon and Mr Gunn, which the auditor handed over to the administrators on the day before the second creditors’ meeting earlier this month.

According to the minutes of the meeting, the July 8, 2019, letters “suggest that financial support may have been provided”.

Both Mr McKeon and Mr Gunn have said any such letters were ineffective and withdrawn and revoked.

Ms Sheridan, however, said the DOCA due to be signed by the administrators could result in her clients receiving less than 9c in the dollar for their shareholder loans. If the written undertakings provided by Mr McKeon and Mr Gunn were ruled to be valid, they would receive full repayment of their $4.3m in loans.