A lack of support from the gay and lesbian community and negative early press are the reasons behind Sydney 2002 Gay Games financial collapse, according to Games administrators.
The reasons were listed in a report from administrators RSM Bird Cameron Partners at a second meeting held to discuss recovering debts, which Sydney Star Observer attended as a creditor. The reasons were provided by Sydney 2002 directors, who also blamed overestimations of Farewell Party participation.
Administrator Peter Marsden wrote while he had no reason to expressly disagree with the reasons given by Sydney 2002 directors, he would need to make further investigations.
The report to creditors also revealed that even if nearly $800,000 of assets -“ mostly debts and potential licensing income -“ were realised there would still be a $1.6million dollar shortfall in money owed to creditors.
But the Games fall-out is likely to continue well into 2003 with accusations that 62 individuals and companies may have received preferential payments valued at around $2 million, just before the company was placed into administration.
Marsden told the meeting the administrators had not been able to determine whether or not the company was trading while insolvent, which could have left Sydney 2002 directors liable for court action.
We’ve spent some time talking about the prospect of insolvent trading. We’ve not yet formed a detailed view on whether there has been insolvent trading, Marsden said.
We need to do a fair bit more work on that. Part of the difficulty relates to the fact that most of the debts were incurred during a small amount of time -“ in the month or so around the date of the games. At the end of the day the questions about process and insolvent trading will be determined by the court.
The report contained some contentious elements, including a budget prepared in 1999. Marsden said the 1999 budget, which projected a loss of more than $385,000 was the most appropriate of the dozen different versions the administrators had found.
There was also a listed figure of $855,000 for general board expenses. The amount was more than twice the provided amount spent on advertising the Games, and eight percent of the total expenditure.
Neither the administrator nor Sydney 2002 co-chairs Bev Lange and Peter Bailey were able to explain to creditors what the money had been spent on.
[But] it certainly didn’t get paid to board members, Lange said.
She told the Star later the explanation was simple -“ the figure was plainly inaccurate.
As best as I understand it, it was what [Mr Marsden] said at the meeting. They took the figures from our computers and put them into their formats. The problem had occurred in the reformatting, she said.
But Lange said she would not correct the figures: That’s not my responsibility.
The former directors have met to discuss preparing a Deed of Company Arrangement, which would see a new organisation formed to raise money to pay debts.
Lange said the proposal was at a very early stage.
We’ve had discussions with a number of the creditors and we’re trying to achieve it. The purpose is to get a better deal for the creditors. At this stage we’re only in discussions.
The meeting was adjourned for 60 days, to allow the directors to prepare the Deed of Company Arrangement and several licensing agreements to continue. The agreements -“ and the proceeds from different Sydney 2002 memorabilia – could be worth several hundred thousand dollars to creditors, Marsden said.
He was unable to say when creditors were likely to see any payments.
I don’t know what the final determination will be -“ some of these things take several years, he said.
If the matters are defended and they go to court the court process takes 12 months, two years, three years -“ whatever the process is.
The administrators are currently holding over $300,000 cash in an account, he said.