Republic Hotel goes into administration as financiers chase $90m
Virtical Group’s Republic Hotel in the Sydney CBD has gone into administration just days after the embattled property developer exchanged contracts for the pub for $32 million.
The group’s main non-bank financier, Bond Finance, appointed BRI Ferrier principals Peter Krejci and Andrew Cummins as administrators for the pub on Friday and froze Republic Hotel Sydney’s bank accounts, according to ASIC documents and anonymous sources.
It followed Bond Finance issuing the group a default notice on $90 million in mortgages, including for companies that own the Adelphi Hotel in Melbourne and sought to buy the Kinselas and Courthouse pubs in Sydney’s Taylor Square. Bond Finance has told Virtical group it has one month to pay up or else it will move to sell its mortgaged properties.
The Republic Hotel, in the heart of Sydney and purchased for $40 million last year, had been the jewel in the crown of Virtical’s burgeoning hospitality empire and a key money earner.
But after exploding onto the scene last year by spending $125 million on iconic bars and hotels, Virtical has been under pressure to offload its property.
This month it failed to settle on the Metropolitan Hotel in Sydney’s George Street which it bought for $40 million and claimed to have been refurbishing, and has been seeking to sell the Adelphi Hotel.
The Republic’s administration may spoil Virtical’s deal last Friday to sell the hotel to the Thomas family, the regional pub group run by Chris Thomas, for $32 million – a major loss.
However, a Virtical spokesman confirmed the administrator appointment and said “the sale process to Thomas is proceeding as planned and will be settled in the next few weeks”.
GST refunds
It is the latest setback for the group which The Australian Financial Review revealed last week was also under investigation by the Tax Office over $100 million in GST refunds that it had claimed. The tax office is also investigating the group over superannuation after venue staff complained they had not been paid super all year.
Virtical Group is also seeking to sell its Adelphi Hotel in Melbourne and last month sold Launceston and Newcastle properties.
Virtical managing director John Palasty, who was not the head of the group when it made the GST refund claims under investigation, has denied there is any audit or ATO investigation and claims the group is up to date with superannuation.
Virtical and its former director Mark Toma are also in a bitter legal dispute with ASX-listed investment fund MA Financial over the $61 million purchase of a pair of historic pubs on Oxford Street’s Taylor Square, the Courthouse Hotel and Kinselas.
Virtical tried to pull out of the deal and was sued by MA Financial. The Supreme Court of NSW ordered Mr Toma to personally settle the deal. However, he is appealing against the decision.
