Court battle looms for Mosman mansion of iProsperity chief Michael Gu
The battle over the few spoils from the collapse of the iProsperity empire is headed for a new court case.
A legal stoush over the proceeds of the Mosman mansion which property funds manager turned international fugitive Michael Gu resided in is headed for a fresh court battle.
The harbourside mansion in the wealthy Sydney enclave, which was defaced with Chinese graffiti when Gu’s iProsperity empire collapsed, sold for $12m in 2020.
Now a battle over the remaining spoils from the sale, after Credit Suisse took its share, is headed to the Federal Court as Gu’s aggrieved backers and the business’s liquidator Cor Cordis face off.
NSW Supreme Court judge David Davies on Thursday made orders vacating a planned April hearing and transferred the case to the Federal Court.
The legal battle kicked off when the Swiss bank started possession proceedings against Gu over the Mosman home on up-market Superba Parade.
But a series of other parties joined the case, claiming interests in the land arising out of various deals struck with the flamboyant entrepreneur, including loans claimed to be secured on the land as well as trust-related claims.
After Credit Suisse was paid out what it was owed from the sale proceeds, funds of $5,287,560.97 remained and were paid into court. Cross-claims were then filed by four groups of defendants, in each case naming Gu, who has never appeared, as a cross-defendant.
The battle has been complicated as Gu ran his failed hotel and real estate empire without proper documentation, which he claimed was the “Chinese way”.
A group of Chinese investors known as the Hu parties are claiming all the funds under an equitable charge securing a guarantee and indemnity given by Gu in June 2020 for payment of a debt of $5,761,972.60 plus interest.
His business, iProsperity Pty Ltd, is claiming $1,278,611.62 under a trust arising from his purchase of the Mosman home in 2017. In an alternative claim it is chasing $1,065,246.14 under a trust on the basis that he misappropriated this amount of the price from the business.
Further sums are also being sought by a company called Great Lands, which is seeking $3m or $1.8m, since $1.2m was repaid, under an equitable mortgage given by Gu in 2019. Another company, Jing Spring Hill Pty Ltd, is claiming $4.4m.
Since the iProsperity collapse in 2021, most of Gu’s residential real estate has been sold, with the Mosman house purchased by Robert Mead, the local head of PIMCO.
Gu, a former telco salesman, purchased the house for $10m and fled Sydney in 2020. His whereabouts are unknown but he was declared bankrupt last August.
A house Gu bought for his mother at David Place, in nearby Seaforth, also sold. But an ultra-luxury Sydney apartment he purchased is still on the market with a price tag of about $6.5m.
Gu had secretly purchased the opulent three-bedroom apartment in the Opera Residences development at Sydney’s Bennelong Point in 2016, when the project launched. Other Gu sales include a Rolls-Royce Wraith disposed of for $502,000.
The iProsperity founder and his offsider pumped $8m from the company into a major casino, according to liquidators Cor Cordis.
Gu led delegations of prospective investors from Asia in luxury jets to Crown Casino and was also linked to figures at The Star.
Value for owners and investors is paramount for developer
ALAND tries to achieve both yield and capital appreciation with its properties, and offers value for owner-occupiers as well as investors and downsizers.
ISPT gambles on a $250m portfolio split
Fund manager ISPT has split a portfolio selling Sydney elements to the family behind the Busway empire and Queensland assets to fund manager Irongate.