Jon Adgemis, a former KPMG executive whose Public Hospitality Group collapsed with debts of more than $1.8 billion, appeared in a Federal Court in Australia on Friday seeking to block or restrict a public examination of his finances, as the Australian Tax Office continues investigations into the failed hotel group.
Former KPMG executive Adgemis faces Federal Court examination over $1.8 billion bankruptcy
Jon Adgemis, a former KPMG executive whose Public Hospitality Group collapsed with debts of more than $1.8 billion, appeared in a Federal Court in Australia on Friday seeking to block or restrict a public examination of his finances, as the Australian Tax Office continues investigations into the failed hotel group.
Adgemis assembled a portfolio of 22 hotels, mostly in inner-city Sydney with a handful in Melbourne, beginning with the purchase of the Darlinghurst Exchange Hotel in 2015 for just over $4 million. That property was subsequently revalued at $26 million before renovation work was completed, providing collateral for further acquisitions. By 2017 he owned four Sydney pubs, each revalued and each requiring extensive work, some of which was started but not finished.
Rather than consolidating during the pandemic, Adgemis pursued further acquisitions in 2021 and 2022, revaluing each property shortly after purchase. As post-pandemic construction costs rose, the group was forced into loans at progressively higher interest rates. His former chief financial officer Alex Andruska told this week's liquidator hearing that none of the hotels turned a profit: 'All the companies were losing money. All of them.'
Adgemis had been declared insolvent with debts exceeding $1.8 billion and, before the ATO intervened, was preparing to offer creditors 0.15 cents in the dollar — a total of $2.3 million — to settle those debts. His insolvency trustees Ben Ho and Scott Pascoe of WLP Restructuring had reportedly agreed to recommend the offer. The ATO intervened before the proposal reached creditors and took over a bankruptcy petition originally filed by Richard Gazal, Monaco-based son of Joe Gazal, who alleged unpaid debts of $26 million. BRI Ferrier has since been installed as liquidator.
The ATO raided Adgemis's offices in 2024 and has alleged that companies in the Adgemis orbit created sham transactions totalling more than $1 billion, resulting in more than $80 million in GST refunds. At the time it took over the bankruptcy petition the ATO was seeking $162 million it claimed it was owed, most of which comprised director penalties. The Federal Court this week agreed to consider arguments from Adgemis's legal team but ruled the ATO-funded hearings into Public Hospitality Group's finances should continue.
Adgemis built his hotel empire through relationships forged during his time at KPMG. Kathmandu founder Jan Cameron and WIN TV owner Bruce Gordon both backed him on property developments and both reportedly lost money; Gordon launched legal action to recover $10 million. The relationship with Cameron later led Adgemis to become a witness for the Australian Securities and Investments Commission in its case against her over undisclosed shareholdings in dairy group Bellamy's. In 2023, Adgemis told the Australian Financial Review's Rear Window column: 'People just look at us as an overleveraged pub player [and ask] how does he get out? First and foremost, we're a property private equity group. We might do hospitality … but our main focus is extracting full value from the property.'
- The source does not state how Adgemis is funding a legal team described as costing upwards of $20,000 a day, despite being bankrupt.
- The source does not state whether any criminal charges have been filed against David Drummond.
- The source does not state the outcome of Bruce Gordon's legal action to recover $10 million from Adgemis.
- The source does not state the current total amount the ATO is seeking following its expanded investigations beyond the initial $162 million.
- The source does not state whether Adgemis or his representatives responded directly to Andruska's specific allegations at the hearing.
- The source does not state the current status of Adgemis's plan for a stock market listing beyond noting it never got off the ground.
Read the original at ABC News Australia