Bankrupt Adgemis’ deal to rescue a slice of his pub empire collapses
A last-ditch attempt from bankrupt dealmaker Jon Adgemis to claw back part of his collapsed pub empire has fallen apart after the businessman missed a deadline to pay $6.7 million to buy back five hotels.
Adgemis had been attempting to buy back the pubs which were put under receivership in September. At the time, New York lender Muzinich & Co called in insolvency specialists FTI Consulting as receivers for Oxford House, The Exchange in Darlinghurst, The Norfolk, The Strand Hotel and Camelia Grove Hotel, all in Sydney. BDO was appointed administrator of Public Lifestyle Management, the operating company behind the assets.
Under a deal between Adgemis and BDO, the businessman paid two cash instalments worth around $1 million earlier this year. The final component was $6.7 million in convertible notes, arranged by Archibald Capital.
The money had been earmarked by administrators to pay staff who are owed entitlements, including superannuation. According to a report by BDO in December, staff were owed around $4.5 million. In June, BDO signalled it was beginning to verify outstanding superannuation payments via the ATO with money it had received up to that point from Adgemis.
Adgemis launched his own pubs business, Public Hospitality in 2021, building a portfolio of 22 venues before debts led to its collapse.
Amid $1.8 billion in debts, largely from personal guarantees he gave on loans to build Public, Adgemis was declared bankrupt. His is the largest personal bankruptcy in Australian history, and is equal, in nominal terms, to Alan Bond’s when he went bankrupt in 1992.
The $6.7 million in convertible notes were to convert to cash on September 30. However, they were secured against five key pubs, one of which Deutsche Bank, one of Adgemis’ key lenders, appointed receivers McGrathNicol to on the same day. KordaMentha has been brought in as administrator over the development group, which acts as the operating company for Adgemis’ pubs. Deutsche led a major refinancing of Public Hospitality’s debt last year.
The default notices issued by Deutsche meant the deal conditions had not been met and, with the cash not paid to administrators, automatically terminated the sale of the five pubs, BDO’s Duncan Clubb wrote in a letter to creditors on Tuesday. Clubb, who has now been appointed liquidator, told creditors he is considering the implications of the deal’s termination.
“In the interim, we will be proceeding with the liquidation,” he wrote.