GST ‘issues’ scuttle pub baron Jon Adgemis’s $1.5bn rescue plan

Jon Adgemis’ financial fate was set to be decided on Friday before a late intervention from the tax office and bankruptcy regulators. AFSA said in a letter bankruptcy trustees may have not satisfactorily investigated Mr Adgemis’ financial affairs.

High-profile businessman Jon Adgemis in Darlinghurst on Wednesday. Picture: Liam Mendes / The Australian

The bankruptcy regulator and tax office have sensationally blocked Jon Adgemis’s efforts to settle $1.5bn of debts, claiming the tiny returns on offer by Sydney pub baron did not reflect his “maintaining an extravagant lifestyle”.

Friday’s meeting of creditors at Sydney’s Radisson hotel dialled up the drama before it was adjourned having heard allegations of “a significant alleged improper claim for GST by the group at large”.

Mr Adgemis will return in four weeks for another meeting to vote on his personal insolvency agreement proposal, which as it stands is worth just 0.17c in the dollar.

The Australian Taxation Office wrote to bankruptcy trustee WLP Restructuring, dissatisfied that the taxpayer was likely to see just $275,347 returned against its nearly $162m owed while Mr Adgemis resided in a Bondi Beach apartment driving a Mercedes G Wagon.

“It is not apparent from the content of the report whether the controlling trustees have engaged in meaningful discussions with the debtor for a return to creditors, beyond the meagre sum being offered,” wrote deputy commissioner Julian Roberts, according to a copy sighted by The Australian.

“That is particularly relevant considering the apparent access to monies and lifestyle not befitting an individual indebted for over $1 billion and purporting to rely on relatives funds to provide creditors any return on their debts.”

Mr Adgemis’s attempt to make his backers whole and sustain his fledgling hospitality business would avoid bankruptcy, and enable him to remain a company director if 75 per cent of creditors by dollar value accept his deal.

But the Australian Financial Security Authority, which oversees bankruptcies, put any resolution on hold, after it appeared via video link to the surprise of assembled creditors.

Sydney pub baron Jon Adgemis has been given a four week reprieve on his bankruptcy proposal.

Beaming into the room, national manager Neville Matthew told the meeting AFSA had not yet decided if there had been “contraventions of the bankruptcy act” but the inspector general was concerned about the bankruptcy trustee’s report.

In a letter sent yesterday, also seen by The Australian, AFSA warned WLP’s Scott Pascoe and Benjamin Ho they may have not satisfactorily investigated Mr Adgemis’ financial affairs, and specifically his properties.

And ERA Legal director Blake O’Neill, acting for liquidators, disclosed serious concerns about a significant GST debt tied to Mr Adgemis’s former empire.

He told the meeting there were concerns of a GST scheme in the “tens if not the hundreds of millions of dollars”, and that any bankruptcy settlement risked being “tainted” by the GST issue.

On the ATO’s radar is Mr Adgemis’s $60,000 a month rental in Sydney’s Bondi.

“It appears the debtor has access to significant monies but has chosen to direct these monies towards lifestyle expenses and not creditor payments,” Mr Roberts said in his letter.

How much does Jon Adgemis owe the ATO?

The tax office is owed $122m from Public Hospitality Operating Co, which is currently in liquidation. It is owed further money, including penalties, by the businessman.

WLP replied to the ATO that it was unclear where other funds for Mr Adgemis could be found given the accounts funding his rent and lifestyle were controlled by McGrathNicol, as administrators, and were already owed $379m.

Mr Pascoe, the WLP trustee, told the meeting he didn’t expect further investigation would “ultimately change our position”.

A WLP spokesman said the four week adjournment would allow the firm to review issues and “conduct further investigations”.

Already, WLP has queried Mr Adgemis’s assurances, after telling trustees he has $80.3m in secured debts, plus a further $1.34bn owed to unsecured creditors, their report of July 18 shows.

The bankruptcy trustees counter that Mr Adgemis has $23.5m in secured debts, and a further $1.5bn is owed to unsecured creditors, according to the same report.

Much of the unsecured tally is tied to personal guarantees.

High-profile businessman Jon Adgemis driving his Mercedes Benz AMG G63, currently worth around $260,000. Picture: Liam Mendes / The Australian

He has $3.79 in a bank account and property and luxury cars worth nearly $9.5m.

These include a 2015 Land Rover Range Rover, plus two financed cars, a 2021 Mercedes-Benz G63 AMG, and a 2022 Land Rover Range Rover.

He co-owns a house in Sydney’s Rose Bay with his mother and a property in Hurstville.

Mr Adgemis has told his creditors he will tip in a further $3m, funded by his sister, to sweeten the deal. This is the basis of the 0.17c in the dollar return, or $2.5m.

Bankruptcy trustees have warned creditors could see nil return in the event of Mr Adgemis’ personal insolvency.

Key lenders were heavily exposed to Mr Adgemis’s downfall, including Deutsche Bank, which backed a major refinancing of his pub group late last year.

Deutsche Bank has $371m in debts tied to the businessman.

Sydney private credit lender Gemi Investments disclosed almost $395m across 23 different guarantees, and Yorkway had nearly $136m across five different exposures.

Mr Adgemis has been spotted across Sydney in recent weeks sitting down with business figures, in an attempt to lobby them.

Sources also note a sales process has been underway for several pubs still controlled by Mr Adgemis.

The unravelling of Mr Adgemis’s business empire comes years after the ex-KPMG deal-maker convinced private lenders to fund his empire of 22 hotels and pubs across Sydney and Melbourne at its peak, and talk of a potential ASX float.

Insolvency documents revealed a key operating arm of Mr Adgemis’ empire, Public Lifestyle Management, had been insolvent since 2021.

The operating arm recorded $9.9m in losses over the 2021 to 2023 financial years.

Mr Adgemis’ pubs are now operated by Linchpin Group, a hospitality operation headed up by restauranter Terry Soukoulis and figures tied to Mr Adgemis’ former pubs group.

Originally published as GST ‘issues’ scuttle pub baron Jon Adgemis’s $1.5bn rescue plan