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Cedar Meats, the abattoir probed over Victoria’s first major COVID-19 outbreak, is at the centre of an almost $130 million debt dispute after a $45 million loan ballooned because of penalty rates.
Supreme Court Justice Michael Osborne on Monday found Pierre Kairouz and Antonio Murdaca liable for the debt taken on by Global Meat Exports (GME), which was purchasing Cedar Meats as part of an expansion into the agricultural industry.
The Cedar Meats processing plant in Brooklyn was forced to close during the first round of pandemic restrictions.Credit: Jason South
Murdaca and Kairouz had acted as guarantors for two loans worth a total of $43.65 million, which GME did not pay. The loans carried massive repayment interest penalties, which has since caused interest to more than triple.
It is the latest setback for the meat producer, which was linked to the largest coronavirus outbreak in the state’s first pandemic wave. More than 110 people connected with the meatworks were suspected of being infected with COVID-19.
A spokeswoman said Cedar Meats remained unaffected by the decision.
“Mr Tony Kairouz, the chief executive officer, and the driving force behind the company for the last 10 years, remains in control of the facilities and has the full support of lenders to the business,” she said.
“It is expected that the company will transition to the new owners early in the new year.”
Cedar Meats was a family-owned business run by the Kairouz family, comprising six brothers and their families. Pierre Kairouz is the youngest of the brothers.
Pierre Kairouz is not a director of Cedar Meats, but his nephew, Tony Kairouz, remains a director and secretary, ASIC records show.
Court documents show that in 2018, Murdaca became aware that the Kairouz family was interested in selling the Cedar Meats business.
Melbourne’s Cedar Meats abattoir has been linked to a cluster of infections in Victoria.Credit: Jason South
Later that year Murdaca, along with several others, incorporated GME to buy Cedar Meats, including its licences and properties.
Court documents show that GME entered into two short-term loan agreements in late 2021.
The first, in October, was worth $36.5 million with an annual interest rate of 60 per cent, and the second, in December 2021, was worth $2 million with an annual interest rate of 120 per cent. The interest would kick in when the loans became due.
Neither debt was paid by GME, causing the Seychelles-based Jasper Nominees to take Murdaca and Kairouz to court seeking to recoup the $129,189,873.99 debt.
Murdaca and Kairouz had alleged that Jasper Nominees’ representatives made misleading representations when loaning the money, with Kairouz also alleging that the conduct amounted to unconscionable conduct and breached consumer law.
Murdaca and Kairouz made several arguments to extricate themselves from the debt.
But Osborne rejected arguments that Jasper Nominees and its representatives had made misrepresentations, or that the debt was unenforceable because the amount of interest was so high.
“Mr Kairouz and Mr Murdaca are liable as guarantors … for the amount repayable by the primary borrower, GME … together with interest payable under those agreements,” Osborne found.
Cedar Meats in Brooklyn during the pandemic.Credit: Jason South
Jasper Nominees has since been able to recover $535,997.94 after selling one of the properties the debt was secured against.
At the beginning of the pandemic, Cedar Meats management was accused of dismissing reports of workers who believed they may have had coronavirus as “rumour and innuendo” weeks before health officials shut down the abattoir.
This masthead has previously reported that Cedar Foods (Aust) Pty Ltd, which was used between 2012 and 2016 to provide day-to-day operations for Cedar Meats, collapsed in 2016 and left behind a multimillion-dollar debt to the Australian Taxation Office and unpaid invoices related to WorkCover claims.
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