Auction house Mossgreen owes $5.8 million to antique vendors
Paul Sumner's Mossgreen art auction house has debts of $12 million, its administrators BDO told the first creditors' meeting.
There were 400 creditors owed money, with 50 turning up to yesterday's meeting.
Toorak businessman Jack Gringlas confirmed to Fairfax Media that his family company was the biggest creditor, being owed $6 million.
It is understood that Mossgreen owes its vendors $5.8 million, with the remainder owed to unsecured trade creditors.
A recent auction vendor is owed $400,000 from sold art and furniture, with another owed $250,000.
Creditors will vote at a second meeting whether to liquidate Mossgreen or be restructured so it can continue.
Property Observer understands the second creditors' meeting will be held around February 7 or 8 where Paul Sumner will have provided the administrator and creditors with his proposed scheme of arrangement offer.
The meeting was advised the company assets were $3 million.
Auctions scheduled for its Armadale premises will reportedly proceed in February, but Sydney's Woollahra will close indefinitely.
Mossgreen's Auckland office will re-open.
Gringlas, a Mossgreen director for four years until June 2017 when he sold his shares to Paul Sumner and his wife Amanda Swanson, said he was upset and frustrated.
Asked the about creditors' chances of getting their money back, Mr Gringlas noted Sumner had "written to every vendor and told them they're going to get 100 cents in the dollar ... that he is putting in place arrangements to ensure that they all get paid".
"So he must believe it. I don't know where that money is coming from because there isn't the money in the company, so I can only assume he's planning to bring more money into the company."
Gringlas sold the leased High Street, Melbourne premises mid-last year for around $10 million to John Karkar.
The administration came late last month.
The move came December 21 with the appointment of three administrators from accountants BDO, James White, Nicholas Martin and Andrew Sallway.
It followed failed fundraising attempts in early December.
The 172 lots (pictured onsite) included the sale of a $192,200 Ian Fairweather work which had an $80,000 to $120,000 price guidance. A Tim Maguire fetched $117,800.
Its most recent auction on December 7 was contents of Dr John Sheehy and Jean Sheehy with just 274 of the 438 lots being sold.
Sumner blamed the current circumstance on growing "a little bit fast."
In 2013, Mossgreen acquired coin, stamp and memorabilia experts Charles Leski Auctions and in 2015 acquired New Zealand auction house Webb's.
It was a capital injection from wealthy former engineer Jack Gringlas that effected the merger with stamps and collectibles firm Charles Leski, followed by the Gringlas purchase of Sotheby’s former long-time saleroom in Melbourne’s upmarket Armadale with Mossgreen relocating from Toorak Road, South Yarra.
In September last year Gringlas, a self-described passionate stamp collector, advised the stampboards website that "both Charles Leski and I have sold our shares to Paul Sumner."
"There is nothing unusual about this, just part of my transition to retirement planning, whereby I am reducing the number of active boards that I sit at.
"I am mainly focused on my finance business, working with my son to grow a significant mortgage investment business for commercial loans, together with managing a number of other business investments."
In an Australian Financial Review profile in 2016, Sumner said Mossgreen's turnover grew from about $10 million before the Leski merger to $39.6 million in 2015, with staff numbers jumping from eight to 55.