Public Hospitality ‘insolvent since 2021’ as Jon Adgemis faces claims he ‘pulled’ $9.4m from business

Administrators have recommended creditors vote to wind up parts of Jon Adgemis’s pubs business despite an attempt to lodge a rescue plan.

Public Hospitality Group’s Jon Adgemis. Picture: David Swift

Sydney pub baron Jon Adgemis’s hospitality business allegedly traded while insolvent for three years, with an administrator saying the former KPMG dealmaker pulled out $475,000, plus a further $9m through a related entity, from the teetering business prior to its collapse.

In a dissection of a part of Mr Adgemis’s Public Hospitality Group, administrators have alleged the staffing entity of the business, Public Lifestyle Management, may have traded while insolvent since at least August 2021.

Administrators BDO said PLM suffered ongoing trading losses between the 2021 and 2023 financial years, and these could “not be recouped by a profitable year in FY24”.

Documents show PLM accumulated $9.9m in losses over the 2021 to 2023 financial years, with the group posting an $8.27m profit in the 2024 financial year. Administrators said PLM funded trading losses through creditors and cash injections in 2021 and 2023.

BDO administrators say Mr Adgemis could face a $24.3m insolvent trading claim if the business slumps into liquidation.

The former KPMG dealmaker is also open to a claim he breached his director duties, with administrators saying he may have failed to “act in good faith in the exercise of his or her powers and discharge of duties” and breached a requirement to “not make improper use of position as an officer, to gain, directly or indirectly, an advantage for himself or herself or for any other person, or to cause detriment to the corporation”.

The report says 85 per cent of aged creditors were unpaid outside trading terms and were owed a collective $5.7m when the business was tipped into administration. The administrators say Mr Adgemis had withdrawn $475,000 from the business since November last year.

This was in addition to a further $9m extracted from PLM accounts in the year before the collapse of the business.

“It is our preliminary opinion that funds withdrawn by the director and related entities … may also constitute an unreasonable director-related transaction,” BDO administrators said.

PUBLIC and Grossi Group’s Guy Grossi, Liz Rodriguez and Jon Adgemis

The collapse of parts of Public comes after US lender Muzinich pulled loans on Mr Adgemis’s pub group, after a dispute over a $100m debt stack tied into the business. Mr Adgemis, who made a name for himself at KPMG and assembled an array of property interests, has steadily built the Public business, snapping up pubs and hotels across Sydney, Melbourne and regional NSW. But the array of almost 22 venues boasts several non-operational sites, with several under renovation.

The administration focuses on five assets currently under control of Muzinich, with the remaining pubs and hotels outside the administration.

However, the former KPMG dealmaker has proposed a deed of company arrangement that could mean Mr Adgemis avoids the company being handed to liquidators, in which his company JAGA Group hands over $7.7m through an upfront $1m cash contribution and a further $6.7m in a convertible note due by September next year.

Staff would receive a return of 100c in the dollar, while unsecured creditors would get just 12.2c in the dollar.

This is compared to a liquidation in which staff get 100c in the dollar, while unsecured creditors and related party creditors would get 33.15c in the dollar.

Administrators say they “have not had sufficient time to consider the DOCA proposal in any detail” and recommend the companies be wound up.

“It is our opinion that it would be in the best interests of creditors of the companies to wind the companies up,” BDO said.

A spokesman for Mr Adgemis and JAGA Group said the proposed rescue deed “would also see a substantial payment to unsecured creditors, including the ATO”.

“We would note that under the original refinance negotiated in March 2024 funds were being made available to pay all creditors and employees and the business was a financially viable entity,” he said.

“That position changed when Muzinich took over the Deutsche Bank position in Pool 1, subsequently declined to make funds available and appointed FTI.”

“In contrast, Deutsche Bank in its refinance of Pool 2, has made funds available, with creditors and employees paid.”