Billionaire Adrian Portelli backs out of Derrimut 24:7 gym deal

“I still have great respect for what the Derrimut team has built and wish them nothing but success in the future.”

In a show of force on Friday, lawyers for nine different creditors of the company appeared at a Federal Court hearing into the company’s liquidation, arguing that Derrimut should provide more documents to prove it was possible to refinance its debt.

Loading

Two new companies – energy company Origin and finance company Equity Trustees – joined together on Thursday to support the ATO’s Federal Court challenge, taking the total amount claimed by listed creditors to more than $2 million.

The Tax Office plans to appoint liquidators to Derrimut’s parent company to recover $12.5 million in tax debts, including unpaid superannuation and penalties.

ATO lawyer Seraphina Smith asked for a four-week adjournment after reaching an agreement with Derrimut to give them time to “take steps to settle the debts owed to all creditors”.

The postponement was opposed by a number of major supporting creditors, including energy provider AGL, Derrimut’s former landlord Bourke Street Properties and gym equipment company Life Fitness. These are some of the businesses pursuing late payments from Derrimut.

Creditors were asking the Federal Court for a shorter stay and more documentation showing whether the business would be able to pay its debts in the future.

Lawyer Matthew Hicks, representing Life Fitness, said at the hearing that he was “really in the dark” about what funding would be needed for another four weeks, given three previous similar postponements.

“There is no evidence that we are aware of and absolutely nothing that has been presented to show the defendant’s ability to pay the debt, what refinancing is being sought,” he said.

The case was postponed to 28 November.

Solomos had been publicly optimistic about his company’s future after he and Portelli announced a possible deal in a highly produced social media video last month.

Loading

The IRS is also trying to liquidate a company owned by Solomos that is no longer in operation, seeking another $2.9 million in unpaid taxes.

Financial sources estimate Solomos will need about $15 million to settle his tax debts and at least $15 million to settle overdue debts to hundreds of creditors.

Derrimut’s sprawling gyms in Thomastown and Ravenhall, along with the company’s corporate office in the suburb of Derrimut, are to be offloaded and sold by a bankrupt firm.

Sales documents show the outer suburb properties are being offered vacantly to prospective buyers and expressions of interest are due by December 4. They are being put on the market at the behest of receivers Rodger Reidy, who were appointed by lenders chasing the debt in September.

The properties are expected to generate a total of $30 million, said a source with knowledge of the sale who was not authorized to comment publicly.

Loading

But the proceeds from the sale are unlikely to meaningfully help Derrimut pay off its mounting debts. All three properties have loans from commercial lenders such as N1, Vance Finance and Bizcap.

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.