The ongoing legal turmoil surrounding the Cyprus Community of NSW Limited has escalated further, with a fresh statement from administrator Morgan Kelly (EY) revealing explosive details about the financial struggles of the organisation.
The Greek Herald has obtained insights into EY’s latest court filing, which includes, a critical refinancing proposal, and claims that secured lender Cyprus Capital Limited is obstructing efforts to save the organisation.
In a move that could dramatically shift the future of the Cyprus Community of NSW, administrators filed an application on 29 January 2025 in the Supreme Court of NSW to secure approval for a refinancing deal.
The refinancing plan, backed by an unnamed financier, aims to completely discharge the organisation’s secured debts, including a looming March 2025 repayment to Cyprus Capital.
Administrators argue that without this refinancing, the organisation lacks sufficient funds to meet its financial obligations, increasing the risk of collapse.
EY’s statement, in an update to members and creditors on 30 January 2025, stated, “Upon reviewing the Company’s financial position, it is evident that there are insufficient funds to meet this obligation at maturity, making refinancing necessary.”
This update outlined the financial difficulties facing the organisation and the urgent need for refinancing.
If approved, the refinancing will enable the Company to cease incurring the simultaneous costs associated with the appointment of both Administrators and Receivers, as the full repayment of the Cyprus Capital debt will result in the Receivers’ withdrawal, as outlined in EY’s update to members on 30 January 2025, as full repayment of Cyprus Capital’s debt would force them to withdraw.
EY argues that this would relieve the organisation of the ongoing financial burden associated with administration and receivership, giving it a fresh start.
Governance breakdown and Board conflicts
Kelly’s affidavit, filed in court on 29 January 2025, highlights a long-term governance failure within the Cyprus Community of NSW, which he claims prevented effective financial decision-making. He states that the company has suffered from poor financial controls and inaccurate books and records.
There was a long-term deadlock within the organisation, blocking necessary financial decisions such as the sale of assets. Previous and current board attempts to resolve financial issues through asset sales were thwarted by internal conflicts.
A litigation initiated by a director of Cyprus Capital, Dorothy Bassil, resulted in a court order preventing an Extraordinary General Meeting (EGM), which was meant to allow members to vote on redevelopment options.
The affidavit reveals that the company’s real estate holdings far exceed its debts, yet it has been unable to sell assets due to governance issues and legal actions preventing decision-making.
Allegations against Cyprus Capital and their role in blocking refinancing
Kelly’s affidavit reinforces accusations that Cyprus Capital has obstructed efforts to stabilise the organisation. His claims include that Cyprus Capital refused to provide a payout figure on multiple occasions, despite repeated requests from administrators and their solicitors.
This deliberate delay in financial disclosures prevented the administrators from securing refinancing at an earlier stage.
The debt Cyprus Capital is owed is fully covered by real estate assets, meaning the lender is at no risk of losing its money, yet it continues to obstruct resolution efforts.
Kelly argues that these delays have led to unnecessary financial strain on the organisation and increased the cost of administration and receivership.
Receivership and ongoing costs
The appointment of receivers in October 2024 has led to significant additional costs, further burdening the organisation. Kelly argues that these costs could have been avoided if the company had been permitted to refinance earlier, the deadlock within the board and membership had been resolved, and secured creditors had cooperated in finding a solution.
The receivers, Michael Billingsley and Neil Cussen from Olvera Advisors, were appointed by Cyprus Capital Limited under a financial agreement that gave them the right to take control of the Cyprus Community of NSW’s assets.
This decision was made by Cyprus Capital directors, Dr. Costas (Con) Costas and Dorothy Bassil, who used their position as major lenders to step in and appoint receivers to manage the organisation’s finances.
Refinancing plan and Supreme Court intervention
Kelly states that he and co-administrator David Kennedy believe refinancing is the only viable path forward. He outlines key reasons why this refinancing plan must be approved, including the value of the company’s assets far exceeding its debts.
A new financier is ready to provide funds, but legal approval is required. The removal of receivers would reduce financial strain, making it easier to resolve governance and operational issues.
Without refinancing, the company will not be able to meet its obligations in the coming months.
Latest legal developments
A recent update issued by EY on 4 February 2025 confirmed that court orders made by Justice Black on 31 January 2025 set out critical deadlines for legal arguments and submissions before the upcoming Supreme Court hearing.
The court has now scheduled a key hearing for 18 February 2025, where it will decide whether to approve the refinancing plan. Justice Black’s orders also require:
- Cyprus Capital and other respondents to file evidence by 7 February 2025.
- Administrators to submit any reply evidence by 11 February 2025.
- All written submissions to be filed by 13 February 2025.
- A finalised court book to be submitted by 14 February 2025.
Additionally, the administrators are seeking urgent court orders to compel Cyprus Capital to provide a final payout figure for its secured debts. This figure is crucial for the refinancing deal to proceed. If Cyprus Capital refuses, the administrators are asking the court to force repayment and require the removal of Cyprus Capital’s security interests over the Community’s assets.
Furthermore, the administrators want the court to confirm that the Receivers must step down once the secured debts are repaid and that the refinancing agreement will not personally expose the administrators to liability.
What this means for the Cyprus Community of NSW
The Supreme Court hearing set for 18 February 2025 will now play a crucial role in deciding whether the refinancing plan will proceed. If approved, it could remove the need for receivers and significantly reduce the financial strain on the organisation.
However, if Cyprus Capital continues to delay providing a payout figure or fights the refinancing deal, further legal battles could drag the case on for months.
With millions of dollars and the future of the Cyprus Community of NSW at stake, the next few days will determine whether this organisation can regain control over its financial future or remain locked in a bitter legal war.
The Greek Herald will continue to follow this case closely and provide updates as they unfold.
