Disgraced businessman Craig Gore has pulled off the business deal of his life, managing to avoid the ignominy of a second personal bankruptcy with a remarkable arrangement in which creditors, owed $489 million, have accepted a miserly $3.3 million. Creditors will also receive a 30% stake in a Gore company, which, given Gore’s past business achievements, may not turn out to be an overly lucrative investment. Creditors accepted the deal after Gore’s official trustee found that they would receive a higher rate of return than what would be likely under a bankruptcy.
While creditors are receiving only 0.66 cents for ever dollar owed by Gore (that means, a creditor owed $10,000 by Gore would receive a grand total of $66), the former BRW rich lister still appears to be living in relative comfort. A report prepared by Max Prentice, the official trustee overseeing the arrangement, stated that Gore was living in rental accommodation at the exclusive Mirvac-developed Ephraim Island resort and he has received distributions from the Ocerog Discretionary Trust (of which Gore is a director) of $2.7 million since 2006. Gore has also managed to keep a $97,000 Renoir sculpture.
One especially unfortunate creditor of Gore was his ex-wife, Thaya Morgan Phoenix, who was owed $800,000 by Gore, and stands to receive only $4800 under the deal. Gore’s other major creditors include the City Pacific-founded First Mortgage Fund, which is owed $193.8 million, and Mayfair Limited (owned by Lord Ashcroft), which was owed $138 million.
Gore’s woes stemmed from several overly ambitious property ventures — in 2009, Gore’s financier City Pacific placed three of Gore’s companies into liquidation after the companies defaulted on loans worth $145 million (Gore’s official trustee suggested he had become insolvent as early as May 2009).
CRSWarnerKugel, the court-appointed liquidator of Gore’s company Secured Capital & Finance, alleged earlier this year that it had run “something akin to a Ponzi scheme” and had lent or gifted “funds people had invested in Secured Capital & Finance … to other companies owned/controlled by them” without any documentation or other paperwork. The liquidator also determined that Gore and former partner John Atkinson may be liable for civil or even criminal claims for a range of offences including failure to prevent a company from trading while insolvent, unreasonable related party transactions, breaches of their directors’ duties and potential breaches of the Trade Practice Act.
While yesterday’s deal means that Gore has managed to escaped from a second personal bankruptcy, he wasn’t so fortunate in the early 1990s. Gore was previously declared bankrupt in 1992 and was not discharged from bankruptcy until 1999. While a normal bankruptcy is discharged after three years, Gore’s former official trustee objected to his discharge on the grounds that Gore had engaged in misleading conduct where the amount exceeds $3000, continued to manage a corporation and failed to provide information about property or income.
Atkinson had been declared bankrupt in May this year after a petition from Bendigo and Adelaide Bank. Bendigo, which was owed more than $4.5 million by Gore, opposed yesterday’s deal.
Gore last appeared on the BRW Rich List in 2007 with an estimated personal wealth of $180 million. Gore’s father, Mike Gore, was part of the original Gold Coast ‘white shoe brigade’ and had developed Sanctuary Cove, before fleeing Australia for Canada in the late 1992 after his property empire collapsed. Gore Senior left $45 million debts and Sanctuary Cove spent years in receivership).
Craig Gore’s current deal (which was bizarrely described by Prentice as a ‘win-win’) to avoid bankruptcy is separate from any possible criminal claims resulting from Gore’s conduct in relation to Secured Capital & Finance and his financial advisory business, Wright Patton Shakespeare.