Bankruptcy trustees face a daunting task as they seek to verify $275 million worth of debts declared by Melbourne mining identity Joe Gutnick, who declared himself bankrupt on Friday following a bruising legal stoush with an Indian fertiliser company.
Mr Gutnick has told his trustees he has 25 creditors, including his wife Stera, who is owed more than $30m.
The trustees, Gess Rambaldi and Andrew Yeo of Pitcher Partners, must also assess the value of Mr Gutnick’s now threadbare estate.
Mr Gutnick, a former rich-lister nicknamed “Diamond Joe” due to his extensive investments in diamond and gold projects, declared few assets to Mr Rambaldi and Mr Yeo, telling them in a statement of affairs he had just $2m in a super fund and about $16,000 cash held in bank accounts in Melbourne, Toronto, Hong Kong and Israel.
The trustees are due to file a report to creditors within 28 days, although a judgment on the legitimacy of the claims will not be included.
As one source close to Pitcher Partners conceded, “there is a lengthy investigation ahead” and a full assessment may take months.
However, it is understood the trustees are keen to call a creditors’ meeting sooner rather than later. While this is a legal requirement, the gathering is also viewed as helpful to the organisation as it will require all creditors to make an appearance and enable Mr Gutnick to be questioned in an open forum. Mr Gutnick did not return calls on Tuesday night.
His move brought the curtain down on a colourful mining career stretching back to the late 1980s and stopped India’s largest fertiliser collective, Indian Farmers Fertiliser Co-operative (IFFCO), continuing bankruptcy proceedings against him over a $54m debt, due to be heard at the Federal Court in Melbourne yesterday.
The legal fight with IFFCO, over a $103m partnership struck in 2008, has left Mr Gutnick’s fortune — estimated at more than $200m two years ago — in tatters and forced him into insolvency.
Among creditors owed large sums is a subsidiary of one of the world’s biggest goldminers, Newmont Mining, from which Mr Gutnick has borrowed $15m, according to his statement of affairs. Last night, a Newmont spokesman was unable to explain how the debt arose.
Jewish religious organisation Machne Israel, of Brooklyn, New York, is owed $13.3m, while New York resident Nachum Sternberg, who appears to be a rabbi, is owed more than $33m.
Closer to home, he declared smaller debts totalling more than $2m to individuals in Melbourne. He has also run up credit card bills with American Express, Diners Club, Westpac and Citibank totalling more than $500,000, on top of a $4.9m “contingent personal guarantee” to Westpac.
But related parties form the bulk of Mr Gutnick’s creditors, with more than $100m owed to two trusts — Hoydu Family Trust No 1 and Edensor Consultants — in addition to the $30.7m owed to his wife and $4m owed to his mother and father-in-law.
An additional $16m is owed to Class Productions, where Mr Gutnick was a director until last Thursday, when he resigned from all his corporate positions.
In assets, Mr Gutnick has declared $2m in his Mazil Superannuation Fund and $16,000 held in bank accounts at Westpac, ANZ, Canada’s TD, Harris Bank in Illinois and HSBC’s Kowloon branch.
An amount yet to be advised is held at Israel’s Bank Leumi.
His personal bankruptcy follows a Victorian Supreme Court order winding up the company through which he struck the IFFCO deal, Legend International, made last month after an application by the Indian giant.
Under the 2008 deal, Legend was to supply phosphate to IFFCO and in return IFFCO was to invest $103m into Legend. However, Legend failed to deliver the phosphate and IFFCO took the company and Mr Gutnick to arbitration in Singapore, where Mr Gutnick was found liable to personally pay about $40m and Legend about $17m.
Mr Gutnick challenged the Singaporean arbitration in the Victorian Supreme Court but lost in February, and a subsequent appeal to the High Court also failed.
In its winding-up application, IFFCO alleged that as of May 7 Legend owed it $25m, made up of the original $US12.35m judgment debt plus interest.
Associate Justice Randall made the June 6 order because even though the company was subject to bankruptcy protection in the US, where it is registered, the business was conducted from Mr Gutnick’s office on St Kilda Road in Melbourne. “I am satisfied that the Delaware address, being that of Legend’s registered agent in Delaware, is nothing more than a post box,” Associate Justice Randall said.