The Supreme Court of New South Wales has handed down significant rulings in the financial battle over the Cyprus Community of NSW, ordering Cyprus Capital Limited (CCL) to cooperate with the voluntary administrators and facilitate the refinancing of the organisation’s debts.
The ruling, delivered by Justice Nixon on 18 and 21 February 2025, is a major step towards financial stability for the Cyprus Community. It ensures the Community can finalise a $13 million refinancing deal with Avari Capital Partners, which will allow it to repay secured creditors, end receivership, and regain control of its assets.
However, a $1.09 million dispute over fees claimed by Cyprus Capital remains unresolved, with a further hearing set for March 2025.
Legal battle over refinancing
The Cyprus Community has been embroiled in financial difficulties since September 2024, leading to the appointment of voluntary administrators, David Kennedy and Morgan Kelly (Ernst & Young).
The administrators have spent months attempting to refinance debts owed to Cyprus Capital Limited and Sydney Wyde Mortgage Management Ltd. However, Cyprus Capital had repeatedly failed to provide a payout figure, delaying the refinancing process, applying to the Court to remove administrators (unsuccessfully) and increasing financial uncertainty.
After multiple unanswered requests, the administrators took the matter to the Supreme Court on 29 January 2025, seeking urgent orders to force Cyprus Capital to cooperate with the refinancing plan.
The matter was also heard earlier on 12 February 2025, when Cyprus Capital attempted to alter the cost order made against them following their unsuccessful bid to remove the administrators. The court dismissed Cyprus Capital’s application, upholding the original cost order against them. Further costs were ordered against Cyprus Capital for bringing the application to vary the cost order.
The Greek Herald sources have revealed that the estimated legal costs of the failed challenge are between $500,000.00 to $600,000.00 which either Dr Costas Costa or Cyprus Capital must pay, affecting the shareholders (and those members who invested in Cyprus Capital), from receiving a full payout.
Key Court orders
Following the failure of Cyprus Capital to provide a payout figure for months, the Supreme Court issued a series of orders to ensure the refinancing deal could proceed. The rulings also addressed Cyprus Capital’s delayed cooperation and set strict deadlines to finalise the process.
1. Cyprus Capital ordered to provide payout figure
- Cyprus Capital was ordered to submit a final payout amount by 4pm on 20 February 2025.
- Cyprus Capital provided a payout figure of $6,938,926.37, calculated as of 25 February 2025.
- However, $1,092,323.86 of this amount is disputed, as the administrators argue it includes unauthorised fees and costs, including the costs of the application to remove the administrator which was unsuccessful. This disputed amount has been paid into court while awaiting a decision on 3 March 2025.
2. Cyprus Capital must release security and end receivership
- The court ruled that Cyprus Capital must sign documents to release its mortgage over Cyprus Community’s property and terminate the appointment of receivers and managers by 24 February 2025.
- If Cyprus Capital fails to sign, the Supreme Court Registrar is authorised to sign the documents on its behalf.
- However, The Greek Herald sources revealed that Cyprus Capital had already terminated the appointment of the receivers before the court hearing date, with this only being formally advised to the court on 21 February 2025.
3. Administrators’ liability limited
- The court granted an order under section 447A of the Corporations Act 2001, ensuring that the administrators are not personally liable for the refinancing loan from Avari Capital Partners.
4. Registration of Avari Capital’s security interest extended
- The court extended the registration deadline for Avari Capital’s security interest, ensuring the refinancing process can proceed smoothly.
Financial Breakdown of the Refinancing Deal
The Supreme Court’s orders have now paved the way for the implementation of the refinancing agreement with Avari Capital Partners. The following figures outline the financial structure of the deal and how it impacts the Cyprus Community moving forward:
- Total debt of Cyprus Community of NSW: $13 million
- Total value of real estate assets: $57 million
- Refinancing loan from Avari Capital Partners: $13 million
- Payout to Cyprus Capital Limited: $5,846,602.51
- Payout to Sydney Wyde Mortgage Management Ltd: $7.5 million
- Disputed Amount (held in court pending resolution): $1,092,323.86
The refinancing restructures the organisation’s debts, consolidating its financial obligations into a single lender (Avari Capital) and removing Cyprus Capital’s involvement in the organisation’s finances.
What happens next?
The next key date is 3 March 2025, when the Supreme Court will consider the future case management of the dispute over Cyprus Capital’s entitlement to the $1.09 million in disputed fees or if those funds must be returned to the Cyprus Community of NSW.
If the refinancing proceeds as planned, all secured debts will be repaid, receivership will be lifted, and the Cyprus Community of NSW will regain full control of its assets. The ruling marks a significant step in the organisation’s efforts to stabilise its finances and ensure its long-term sustainability.
*The Greek Herald will continue to follow this case closely and provide updates on the next Supreme Court hearing.
