As Tone Deaf previously reported, beloved East Coast venue chain The Hi-Fi has been in administration for the past month, following a dispute with creditors. Recently, the administrator advised that if a buyer is not found, the venues will be shut down.
US industry bible Billboard now reports venue administrators Romanis Cant have confirmed that the Hi-Fi Group’s three venues — Brisbane, Sydney, and Melbourne — have been sold to the newly registered Melbourne company Max Watt’s Operating Pty Ltd.
However, as documents pertaining to the sale of the Hi-Fi acquired by Tone Deaf reveal, the events leading up to the sale of the Hi-Fi prove more than simply a moneyed buyer stepping in to purchase a struggling venue at the mercy of irate creditors.
So who are the Hi-Fi’s new owners? According to documents published by the Australian Securities and Investments Commission (ASIC), the directors of Max Watt’s Operating are Gregory John Bourke and Kathryn Ann Hamblin.
Two seemingly innocuous names, until you realise their connection to the Hi-Fi Group. Ms Hamblin’s involvement in particular is far more than that of a white knight stepping in to save the Hi-Fi. She is in fact the creditor that first placed the venues into administration.
Tone Deaf can now reveal for the first time the extraordinary events that led up to the near-liquidation and eventual sale of one of Australia’s most prominent venue chains. The details unfolded over the course of one morning on 24th February, at the offices of Romanis Cant Accountants in Melbourne.
Convened by Hi-Fi stakeholders, a meeting was attended by, among others, administrator Simon Nelson; Brian Chladil of Ticket Solutions Pty Ltd, who run ticket retailer Oztix; Kathryn Hamblin, representing Karamika Pty Ltd; Luke O’Sullivan, co-founder of the Hi-Fi; and members of APRA.
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Tensions would have been understandably high during the meeting, with Mr Chladil questioning how the Hi-Fi came to be in such a mess in the first place, and how Mr Alistair Hamblin, at Morrows Accountants was involved.
Mr Hamblin, who we can confirm is Ms Hamblin’s brother, is the general manager of Morrows, who it is soon revealed, not only acted as the Hi-Fi’s accountant, as well as that of several Hi-Fi stakeholders, but also played a crucial role in how the Hi-Fi went into administration.
In addition, Mr Hamblin himself also acted as a guarantor for a number of The Hi-Fi’s creditors.
After catching wind that The Hi-Fi Group was about to be placed in liquidation, Ms Hamblin, who had provided the Hi-Fi with a reported $5 million loan, took action to protect her investment.
Ms Hamblin’s next move was to place the venues into administration under Simon Nelson, who acted on information provided by Morrows Accountants that indicated the Hi-Fi was insolvent and had incurred significant losses.
When Mr Chladil repeatedly suggested appointing another administrator in addition to Mr Nelson, he was struck down by Ms Hamblin and APRA representative Eli Fisher. According to Hamblin at the time, it would be “easier” to just have one administrator.
Mr Chladil questioned whether a sale of the Hi-Fi, for which there were numerous expressions of interest, would see any money going towards creditors besides Ms Hamblin. He was then advised that this would only occur if there was an offer of over $7 million.
When he expressed skepticism about the Hi-Fi’s supposed seven-figure debt to Ms Hamblin, he was reassured by Mr Nelson, who advised that he had reviewed “all necessary documentation”. The meeting ended with Ms Hamblin expressing curiosity about when a decision about a sale would be made.
Meanwhile, the complex web of stakeholders that saw the Hi-Fi switching hands does not end there. Gregory Bourke, co-director of Ms Hamblin’s newly registered Max Watt’s Operating, has apparently been advising Ms Hamblin on Hi-Fi matters since November 2014.
As it stands, if Ms Hamblin’s company has acquired the venue chain for less than $7 million, all other creditors, including Oztix, who Tone Deaf can reveal are owed in excess of $1 million, are unlikely to be compensated.
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Ms Hamblin, meanwhile, as the major secured creditor and the one who appointed the venues’ administrator, will acquire one of the Australian live music industry’s most respected chain of venues, while writing off her delinquent loan.
In addition to the other creditors, who look as though they could be left out in the cold, the Hi-Fi Group’s shareholders are also big losers in this deal, left with a management company, minus three venues, and probably no compensation.
Those shareholders include Luke O’Sullivan, as well as CF Investment Holdings Pty Ltd and MSF Entertainment Pty Ltd, whose directors include Carl Fennessy and Mark Fennessy, respectively.
The Fennessys are the co-CEOs of Shine Australia, the company behind several Australian television brands you may have heard of, including MasterChef, The Biggest Loser, The Voice, and The Bachelor Australia. The Fennessys’ investment in the Hi-Fi Group is estimated to be around $2 million alone.
So what does the future of the Hi-Fi look like now? According to the Hi-Fi’s Live Booking Director James Power, the chain’s new owners have retained all venue staff, including Power, who has been at the Hi-Fi for the last six-and-a-half years, in an effort to “ensure the transition is as smooth as possible with all business running as normal”.
According to Billboard, employees will know more about the situation when they meet with their new owners on Tuesday and Wednesday, with a statement expected later in the week.
As for live music, it appears the turmoil surrounding the Hi-Fi these past few weeks may finally be over and they can return to focusing on what they do best, putting on great gigs, although it’s not clear if they will continue to do so under the Hi-Fi name.
*Editor’s Note: In the original version of this article we wrote that we could not confirm a familial connection between Alistair Hamblin of Morrows Accountants and Kathryn Ann Hamblin. Tone Deaf has since confirmed that the two are in fact relations.
