Some of Sydney 2002 Gay Games’ highly unusual management procedures were dragged out into the open at a bitter meeting of Games creditors last week.

The meeting was the last chance for companies, suppliers and contractors owed money after the collapse of the Games to get something back for their faith in November’s event, and some came out better than others.

Two companies who were given personal guarantees by Sydney 2002 Gay Games staff will receive 100 per cent of the money owed to them by the debt-riddled organisation.

Staff members of Sydney 2002 Gay Games promised On-Site Rentals and Berri Juices payments of more than $50,000. These personal guarantees, one of which was given by former Games CEO Judith Fletcher had left the staff members personally liable for the debts.

Administrator Peter Mars-den of RSM Bird Cameron Partners agreed the arrangements were highly unusual. Marsden told the meeting he had seen documentation from one of the companies confirming the guarantee had been given.

A majority of Games creditors voted in favour of a Deed of Company Arrangement proposed by the former Sydney 2002 board. The agreement to pay the two companies given the personal guarantees was included, to remove the personal liability for staff members.

Several creditors raised their concerns about the arrangement.

Everyone has a problem with them getting 100 percent of their money back. In my opinion if you make a personal guarantee then that’s your problem -“ why should she be allowed to give a personal guarantee and then all the other creditors suffer for it? a woman representing a contracted cleaning company asked.

In a report to the meeting, Marsden recommended supporting the Deed of Company Arrangement, which allowed 59 smaller creditors to receive full payment. The former board provided the 59 names as those that had provided services similar to employees.

Two large creditors, the Federation of Gay Games and Qantas agreed to reduce their debts by $150,000 and $80,000 respectively, if the Deed was accepted. That agreement offset the cost of paying the 59 contractors their full entitlements, Marsden said.

Questions were also raised about who got to be on the list of contractors. Marsden said it was determined by the former board.

We have some broad criteria which we apply to determine who the appropriate contractors are. The broad criteria is these people have effectively acted as employees, Marsden said.

For the purpose of the Deed as proposed, it’s a proposal put forward by the directors. They’ve said -˜these are the people we want to pay’. In a liquidation contractors don’t get a priority. The creditors who have agreed to reduce their debt are effectively paying for the employees and contractors, and the ultimate dividend will be about the same.

Richard Cobden, representing the Federation of Gay Games said there was a general social benefit to paying people who had acted in the roles of employees.

Cobden said the reason the Federation had made a reduction was to maintain some level of goodwill with Sydney 2002.

Marsden will now oversee the Deed in the role of Deed Administrator, with assistance from the former Sydney 2002 board. The board originally proposed to have more control over the company and its assets, but the creditors voted to have Marsden in the main power seat.

The decision to support the Deed will mean other creditors would receive between six and 27 cents for every dollar owed to them. This was a similar result, Marsden said, to what the creditors would have received if the company went into immediate liquidation.

We’ve tried to estimate what the impact of proceeding with the Deed of Company Arrangement is for creditors, Marsden said.

The acceptance of the Deed also stopped any creditors from pursuing legal action against the directors.

Former CEO Judith Fletcher was employed by the Gay Games on a contract through her company Square One. The company will receive between $21,000 and $42,000 for Fletcher’s four month stint as CEO.

Square One gets paid in full for whatever its appropriate debt is, Marsden said.

Marsden would not be drawn on some of the detail from the report, including an internal memo between Games directors suggesting they were aware of the financial fate of the event in early 2002.

I don’t think it’s appropriate to comment in this forum, he said. At the end of the day -¦ if creditors are particularly aggrieved by it, they can vote for liquidation.

Although Lange, Bailey and Fletcher attended the meeting they declined to answer questions, allowing their legal representative to deflect questions addressed to them by the meeting.


Sydney Gay And Lesbian Community Publishing, which publishes Sydney Star Observer is a creditor of Sydney 2002 Gay Games.

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