Deputy Commissioner of Taxation, in the matter of Adgemis [2025] FCA 1218 (3 October 2025)

1. The date of the act of bankruptcy is 18 November 2024.
2. A consent to act as trustee signed by Mr Andrew Reginald Yeo has been filed under s 156A of the Bankruptcy Act 1966 (Cth).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from transcript)

1. Mr Adgemis is or has been a director of a large number of Australian companies and where Controlling Trustees have been appointed and in their most recent report to creditors have identified creditor claims totalling approximately $1.837 billion.
2. A creditor's petition was filed by the applicant creditor, Mr Richard Gazal, on 28 April 2025. That followed the service of a bankruptcy notice (BN274148) by Mr Gazal on 28 October 2024, requiring a debt in the sum of $26,049,607.53 be paid within 21 days by 18 November 2024. Mr Adgemis failed to comply with the bankruptcy notice. Accordingly, an act of bankruptcy was committed by Mr Adgemis on 18 November 2024. Mr Adgemis owes Commonwealth tax-related liabilities of approximately $162,173,054.83. The vast majority of those debts existed at the time of the act of bankruptcy. The Court has ordered that the Deputy Commissioner of Taxation be substituted as the petitioning creditor. The Deputy Commissioner applies for a sequestration order to be made.
3. The Deputy Commissioner, in support of the creditor's petition, relied upon the affidavits of Mr Richard Gazal affirmed on 28 April 2025 (being the affidavit verifying the creditor's petition filed 28 April 2025), Mr Cody Hutton affirmed on 15 September 2025, 23 September 2025 and 2 October 2025 and Mr Dennis Olthof sworn on 23 September 2025, 26 September 2025 (paras [1], [6] and [7]) and 2 October 2025.
4. Mr Adgemis does not dispute the existence of the Deputy Commissioner's debts nor that an act of bankruptcy has been committed. Mr Adgemis initially sought an adjournment of the sequestration order to allow for a meeting of the creditors to occur to vote on whether to enter a proposed personal insolvency agreement (PIA) under Part X of the Bankruptcy Act 1966 (Cth). By the proposed agreement, creditors owed $1.837 billion would share in a fund of $3 million to be paid in instalments over 12 months. However, Mr Adgemis no longer opposes the application for a sequestration order to be made.
5. The Inspector-General in Bankruptcy supported the application for the sequestration order. The Controlling Trustee took a neutral position on the making of the sequestration order.
6. For the following reasons, I order that a sequestration order be made.

1. The Deputy Commissioner moves on an amended creditor's petition for a sequestration order under s 43 of the Bankruptcy Act. Section 43 of the Act provides that in order for the Court to have jurisdiction to make a sequestration order the following conditions must be satisfied:

43 Jurisdiction to make sequestration orders

(a) a debtor has committed an act of bankruptcy; and

(b) at the time when the act of bankruptcy was committed, the debtor:

(i) was personally present or ordinarily resident in Australia;

(ii) had a dwelling‑house or place of business in Australia;

(iii) was carrying on business in Australia, either personally or by means of an agent or manager; or

(iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

1. Section 40(1)(g) of the Bankruptcy Act stipulates when an act of bankruptcy arises:

...a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not ...comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order...

1. Section 44(1) of the Bankruptcy Act specifies the conditions under which a creditor may present a petition, namely that:

(a) the debtor owes the petitioning creditor a debt that amounts to or is above the statutory minimum;

(b) that debt is a liquidated sum due at law or in equity or partly at law and partly in equity and is payable either immediately or at a certain future time; and

(c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

1. In addition, s 52 of the Bankruptcy Act provides:

52 Proceedings and order on creditor's petition

(1) At the hearing of a creditor's petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b) service of the petition; and

(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

...

(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a) that he or she is able to pay his or her debts; or

(b) that for other sufficient cause a sequestration order ought not be made;

1. Accordingly, a combination of the effect of Division 2 of Part IV of the Bankruptcy Act and Part 4 of the Federal Court (Bankruptcy) Rules 2016 (Bankruptcy Rules) requires proof of the following matters, as submitted by the Deputy Commissioner, in order for a sequestration order to be made, pursuant to s 52 of the Bankruptcy Act:

(d) the debtor has committed an act of bankruptcy within the meaning of s 40 of the Bankruptcy Act;

(e) at the time that the act of bankruptcy was committed, the debtor had a territorial connection to Australia of the type prescribed (s 43(1)(b) of the Bankruptcy Act);

(f) the petition has been presented within the period of six months of the commission of the act of bankruptcy (s 44(1)(c) of the Bankruptcy Act);

(g) the creditor is owed a liquidated sum of $10,000 or more which is payable immediately or at a certain future time (s 44(1)(b) of the Bankruptcy Act);

(h) the petition is verified by a person who knows the relevant facts relied on (s 47 of the Bankruptcy Act);

(i) the matters stated in the petition are true (for which purpose the Court may accept the affidavit verifying the petition as sufficient: s 52(1) of the Bankruptcy Act); and

(j) service of the petition, the fact that the debt or debts on which the petition relies are still due, and that a search has been made in respect of the debtor of the National Personal Insolvency Index (Index) (rule 4.06 of the Bankruptcy Rules).

1. For the purposes of s 43(1)(a) and the establishment of the act of bankruptcy, I am satisfied that the requirements of s 40(1)(g) of the Bankruptcy Act have been met. It was not disputed that the evidence establishes:

(a) Mr Adgemis was served on 28 October 2024 with the bankruptcy notice. The same was acknowledged by Mr Adgemis, in his own sworn affidavit on 18 November 2024 in an application he made to stay the bankruptcy notice;

(b) No order was made extending time for compliance with the bankruptcy notice; and

(c) On 24 April 2025, Mr Adgemis' application for a stay of the effect of the bankruptcy notice was dismissed.

1. In the result, Mr Adgemis did not comply with the bankruptcy notice by 18 November 2024 (being 21 days after service) and therefore committed an act of bankruptcy as at that date.
2. The undisputed affidavit of Mr Gazal affirmed 28 April 2025 (being the affidavit verifying the creditor's petition filed on 28 April 2025) confirms that Mr Adgemis did not pay the amount claimed in the bankruptcy notice, or secure or compound that amount to the satisfaction of Mr Gazal within the time fixed for compliance with the bankruptcy notice.
3. The creditor's petition was presented on 28 April 2025 (that is, within six months of the act of bankruptcy committed on 18 November 2024 as required by s 44(1)(c) of the Bankruptcy Act).
4. Pursuant to leave granted by the Court on 29 September 2025, the Deputy Commissioner was substituted as applicant on the creditor's petition. The amended creditor's petition identifies a total debt of $161,925,715.82 owed by Mr Adgemis to the Deputy Commissioner by reason of debts which accrued before 18 November 2024. The existence of that debt is not in dispute. The evidence establishes that the debt existed at the time of the act of bankruptcy alleged in the original petition.
5. An affidavit verifying the amended creditor's petition (attached to the amended creditor's petition) is made by Mr Cody Hutton on 23 September 2025 and verifies that:

(a) Mr Hutton is authorised to make the affidavit on behalf of the Deputy Commissioner;

(b) the matters stated in paragraph 1 of the amended creditor's petition (as to the debt payable to the Deputy Commissioner), paragraph 2 of the amended creditor's petition (that the Deputy Commissioner does not hold security over property of Mr Adgemis), and paragraph 3 of the amended creditor's petition (that Mr Adgemis had the requisite territorial connection to Australia at the time of the act of bankruptcy), are within his own knowledge true.

1. As a consequence, I am also satisfied that the requirements of s 43(1)(b) of the Bankruptcy Act are established on the evidence: At the time of the act of bankruptcy Mr Adgemis was personally present or ordinarily resident in Australia.
2. Once satisfied that there is jurisdiction, the Court must then be satisfied that the following requirements of s 52(1) of the Bankruptcy Act are met:

52 Proceedings and order on creditor's petition

(1) At the hearing of a creditor's petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b) service of the petition; and

(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

1. For the purposes of s 52, I turn to consider whether the requirements of the section are met by the amended petition. I am satisfied that each of the requirements specified in s 52(1)(a) to (c) have been proven.
2. As to s 52(1)(a), for the reasons given above, the affidavit of Mr Hutton on 23 September 2025 verifies the relevant matters.
3. As to s 52(1)(b), I am satisfied that, by operation of r 10.11 of the Federal Court Rules 2011 (Cth), the Deputy Commissioner is deemed to have complied with r 4.05 of Bankruptcy Rules and the amended petition was served on 22 September 2025. This is so because Mr Adgemis filed a Notice of Appearance on that date: See Victorian Legal Services Board v Kuksal (Sequestration Order) [2025] FCA 999 at [97]- [104].
4. As to s 52(1)(c), I am satisfied that the debts on which the petitioning creditor relies are still owing, as is evident from the undisputed evidence contained in Mr Olthof's third affidavit affirmed 2 October 2025 and the third affidavit of Mr Hutton dated 2 October 2025.
5. I am also satisfied that each of the remaining formal requirements necessary to enliven the Court's discretion to make a sequestration order have been proven.
6. As a consequence, the Court's discretion to make a sequestration order against Mr Adgemis' estate has been enlivened. This discretion is unfettered. Mr Adgemis may seek to satisfy the Court under s 52(2) of the Bankruptcy Act (and therefore bears the onus of establishing) that there is some "other sufficient cause" to dismiss the creditor's petition. However, in this case Mr Adgemis does not oppose the making of the sequestration order. By reason of all the matters identified above, including the lack of opposition to the making of a sequestration order, the very significant debt owed by Mr Adgemis to the Deputy Commissioner, the extent of the debts owed and the consequent need for proper investigation of his affairs, I am persuaded that I should exercise my discretion and make the sequestration order.

1. For these reasons, the estate of Mr Adgemis will be sequestrated with the date of bankruptcy noted as being 18 November 2024. I will award the Deputy Commissioner, the Inspector-General in Bankruptcy and the initial applicant creditor costs.

I certify that the preceding 26 (twenty-six) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Raper.