Tax Office takes over Adgemis bankruptcy and spells out suspected ‘sham’ credits claims
The ATO has taken control of Jon Adgemis’ bankruptcy, airing its suspicion he was running a sham GST arrangement.
Broke pubs entrepreneur Jon Adgemis’ attempt to bankrupt himself has been derailed by the Australian Taxation Office, which will seize control of the process after alleging in an affidavit he was running up “sham” payments to improperly claim tax credits.
The Federal Court bankrupted Adgemis on Friday, overruling the former KPMG deal-maker’s attempt to bankrupt himself on Thursday owing $1.8bn and telling creditors he took responsibility for “the position that has been reached”.
Andrew Yeo from Pitcher Partners will now be appointed Adgemis’ trustee and oversee his bankruptcy for the next three years.
Mr Yeo’s team would commence its investigation into the Sydney businessman, and review the work of his former trustee, WLP Restructuring, which was criticised by the bankruptcy regulator for doing insufficient diligence on his financial affairs.
The ATO bankrupted Adgemis over declared debts in excess of $162m. But documents lodged with the court reveal the ATO is pursuing Adgemis over tax debts it claims run in excess of that figure, understood to be closer to $300m.
The tax office says Adgemis oversaw a complicated mess of at least 219 companies, of which 66 have failed or are currently in administration or liquidation, according to an affidavit lodged by an ATO officer.
Since May 11, 2023, the ATO has reviewed 36 companies controlled by Adgemis, claiming some of them participated in contracts or agreements and associated tax invoices that were created “as part of a sham arrangement to support input tax credits claims by other entities controlled by Mr Adgemis”, the officer told the court.
Another company under the influence of Adgemis also claimed tax credits “on its contended acquisitions” and its management agreement with one of his companies was a “sham arrangement” according to the ATO.
Adgemis has previously denied the allegation of GST fraud.
At its peak, his Public Hospitality Group controlled 22 pubs and hotels in Sydney and Melbourne. He ceded control of his last five pubs on Monday when lenders acted to protect their interests.
A liquidators report lodged by BRI Ferrier on Friday also revealed the existence of investigations into “improper GST credit claims which are now subject to an ATO audit and investigation”.
This report, covering a small chunk of Adgemis’ former hospitality and property empire, shows investigations have been limited as the pub baron failed to lodge reports into the relevant companies.
The Australian is not suggesting he has committed fraud, only that the ATO and liquidators allege such concerns.
BRI Ferrier’s report notes that despite assurances from Adgemis’ former chief financial officer Alex Andruska that the companies were “non trading entities”, this was contradicted by filings lodged by the companies and outstanding tax claims.
In the ATO’s court evidence heard on Friday, the tax office questioned the homework WLP Restructuring did into Adgemis’ assets, as well as transactions from his former companies.
The ATO officer questioned how Adgemis transferred $652,674 out of Australia and was able to draw on his companies through director loans.
The tax official cited documents which show between 2016 and 2019, $652,674 was transferred out of a company part-controlled by Adgemis to Italy-registered Olivetta Dreams SRL Societa Agricola.
The ATO officer also queried WLP Restructuring’s finding Adgemis’ shareholdings in Larus Energy, an unlisted company, were worthless. This was despite the company having been given a $200,000 debt facility secured by convertible notes from Adgemis’ JAGA Securities.
A barrister representing WLP Restructuring told Justice Elizabeth Raper it rejected “concerns” held by the ATO with respect to the investigations it conducted.
Pitcher Partners would seek to interview Adgemis and other parties, scrutinising “associated entities and structures” with a view to releasing a report in four weeks.
The Australian Financial Security Authority and the ATO previously took aim at WLP Restructuring trustees Scott Pascoe and Ben Ho, as their client sought to broker a 0.15c in the dollar peace deal with creditors which never succeeded.
“I am deeply disappointed that my broader vision for the group did not come to fruition, and that, despite sustained efforts, I was unable to deliver a better outcome for creditors,” Adgemis said on Thursday.
McGrathNicol partners Jonathan Henry, Damien Pasfield and Katherine Sozou have been appointed receivers and managers to the Empire Hotel in Annandale, Hotel Diplomat in Potts Point, Claridge House in Darlinghurst, The Exchange Hotel in Balmain, and South Bondi Hotel — the new name for Noah’s Backpackers — in Bondi.
KordaMentha partners Ryan Rabbitt, Jenny Nettleton and Scott Langdon now control Public Hospitality Group.
AFSA chief executive Tim Beresford and inspector-general Neville Matthew said the court’s action against Adgemis was an “important step in maintaining the integrity of the personal insolvency system”.
“This outcome underscores the importance of proportionate and purposeful regulation, and AFSA’s commitment to protecting creditor interests and maintaining trust in the insolvency system,” they said.
“The manipulation of personal insolvency proposals and creditor meetings to protect wealth is a priority area for 2025-26.”
