Australian Penthouse publisher Damien Costas will be bankrupted next month unless the pornographer repays personally secured debts amounting to more than $200,000.
On Wednesday, the Federal Circuit Court gave Costas a full calendar month (until March 20) to repay his debts before a bankruptcy petition filed in September 2018 by printers TMA Australia will be finalised.
The petition has since been joined by Southern Colour (Vic) Pty Ltd. and was recently supported by Le Montage — the Sydney restaurant venue where a speaking event in December 2017 featuring the notorious political troll Milo Yiannopoulos sparked protests and violent street clashes requiring heavy police intervention. Costas subsequently refused to pay Victoria Police $50,000 in attendance fees for the Melbourne leg of the same tour.
Costas’ solicitor Daniel Riedstra sought adjournment of the bankruptcy decision until March 13, and argued that his client would be solvent thanks to a loan of $750,000 (expected to clear in late February) as outlined in an affidavit given by Costas on February 18. Crikey sought a copy of this affidavit from Costas’ lawyer but did not hear back by deadline.
“If we’re back on the 13th and things haven’t gone to plan, we’ll be in a very difficult position,” Reidstra told the court, after explaining that bankrupting Costas would have negative flow-on effects to his various companies and employees.
Of the promised refinancing deal, Crikey understands Costas’ affidavit earmarked $400,000 for the development of a restaurant (to be named “Guccione’s” in honour of the founder of Penthouse magazine, Bob Guccione), which will be built in the ground floor of the Darlinghurst offices where Australian Penthouse is published, despite resistance from locals who petitioned the local council to refuse the development approval for a licenced venue.
Costas’ debts include $175,000 for printing services, which he personally secured with applicant and first creditor TMA Australia, according to the company’s managing director, Anthony Karam.
“He signed a personal guarantee when he applied for credit with our organisation. Penthouse went into administration, and we then proceeded to pursue the debt from him personally,” Karam explained to Crikey.
“But the day before the court hearing he showed up and agreed to make full restitution, full payment, with interest, costs, and suchlike.
“He said he needed a payment plan, which we provided him with … to prevent further trouble. I mean, obviously sometimes you try to help people; you don’t want to be cruel, so we gave him a payment plan over three months. After that he just didn’t make the payment threshold, so we moved to a summary judgement to bankrupt him.”
It’s been a busy week for Costas, who appeared at the Downing Centre on Monday to sue Le Montage for a security bond worth $30,000, in the case of Filthy Gorgeous Productions Pty Ltd v Le Montage Pty Ltd.
The counsel for Filthy Gorgeous Productions Pty Ltd, Charles Waterstreet did not surface to support his client, who was alone as he informed the court of learning only hours earlier that the infamous defence lawyer had double-booked his morning, and was busy elsewhere conducting “a very important criminal cross-examination” according to a message given to the court.
In evidence at an earlier hearing, Costas said it was a “chaotic scene” when he arrived at the venue for the Yiannopoulos event in December 2017, and that he did not read the contract presented to him on a clipboard by venue manager Dominic Hannah, and as such could not have been aware that this “second” contract contained a new clause, introduced because of Hannah’s apprehension of a growing level of risk involved with hosting the highly controversial event. The clause stipulated that a $30,000 security deposit for potential damages was only refundable “at our discretion”.
Magistrate Megan Greenwood was not satisfied with the plaintiff’s claim of ignorance, exclaiming: “One of these contracts has five paragraphs, and the other has six; they do not even share a common paragraph.”
Instead, Greenwood accepted evidence given by Hannah that he witnessed Costas “run his pen over the document before signing”.
The court found in favour of Le Montage and awarded costs against Costas.
Outside the Downing Centre, Costas had little time to talk as he made a beeline for his next engagement — “a conference with my lawyer for about six hours” — but he did state for the record: “We will be appealing the decision.”
And if that’s not enough litigation for the strongest of entrepreneurial stomachs, the ever-unflappable Costas is also engaged in a legal battle with the Department of Home Affairs, over a decision to deny his visa application for political agitator Gavin McInnes — the estranged founder of VICE magazine who has publicly disavowed his association with an alt-right men’s group of his own conception, “The Proud Boys”. McInnes was booked to speak with anti-Muslim activist Tommy Robinson in a national speaking tour dubbed “The Deplorables”, scheduled for December last year and cancelled only days before ticketholders expected to hear their favourite firebrands speak.
Directions for the bankruptcy petition will be filed on March 15, with the final judgment to be handed down at 11am on Wednesday March 20.
Disclosure: Ben Hagemann is a freelance journalist previously published in Australian Penthouse. He is still owed around $2300 for writing and photography work for the publication.