The bankrupt director of a collapsed New South Wales development company that owed $131 million to creditors has been banned by ASIC.
Andrew Bodnar’s Sydney-based Kingdom Developments Group operated across five states, owning projects in NSW, South Australia, Western Australia, Queensland and Victoria, including apartments, golf courses and an island off Mackay on the Great Barrier Reef.
It reportedly had 50 development projects in the works when Bodnar filed for bankruptcy in late 2023.
After an investigation by the Australian Securities and Investments Commission, Bodnar has been prohibited from controlling any entity or performing any function involving financial services for 6½ years.
The commission said that although Bodnar has shown “contrition and remorse” his conduct had “demonstrated deficiencies in governance and financial management and showed a lack of professionalism and judgment”.
ASIC said the length of the ban reflected that there was “no dishonesty or intent to defraud”.
According to the ASIC investigation, special purpose vehicles (SPVs) were set up for each of its developments.
The group consisted of several entities, including Kingdom Developments Australia Pty Ltd, Kingdom Management Services Pty Ltd, Kingdom Property Holdings Pty Ltd and 43 SPVs which were proprietary limited companies.
Reports at the time of its collapse claimed that Kingdom Developments sold shares in property purchases and SPVs for redevelopments and renovations, promising large returns, sometimes more than 100 per cent.
At the same time, loans with interest rates of up to 14 per cent were also taken out on the projects, allowing the company to leverage further acquisitions across several states.
Multiple layers of lending proved opaque to those investing, but it came crashing down when a number of sites, including the 86-unit, DA-approved 7-15 Gladstone Avenue site in Wollongong (early renders pictured at top), were repossessed in early 2023.
According to the personal insolvency index, Bodnar filed for bankruptcy in August of that year, and remains an undischarged bankrupt according to the index, meaning he has not yet been released from his debts.
Following his bankruptcy, it was revealed that Bodnar owed $131 million to creditors which remains unpaid, despite efforts in 2024 to launch new companies.
The investigation by ASIC found that Bodnar and Kingdom Developments had engaged in the use of special purpose vehicles without correct licences.
ASIC ruled that the SPVs involved the issuing of financial products to investors and therefore should have been operated by an entity holding an Australian financial services licence or that was authorised by a licensee to provide financial services.
The commission found that Bodnar and the group SPVs were carrying on a financial services business while unlicensed, offering securities in some of the SPVs without the required disclosure document under the Corporations Act.
It also said that Bodnar was involved in engaging in “misleading and deceptive conduct regarding the use and repayment of investor funds”.
ASIC said that Bodnar being an undischarged bankrupt was grounds for a financial services ban also.
ASIC executive director of enforcement Chris Savundra said Bodnar’s conduct showed “a disregard for the laws designed to protect investors”.
“It is incumbent on anyone accepting investor money to ensure they are operating legally and understand their obligations to the investor.”
The ban announced on March 6 took effect from February 26, and Bodnar has the right to appeal the decision with the Administrative Appeals Tribunal.
