Lion Property Group - Case Update

The Victorian Supreme Court has released its reasons for ordering embattled Melbourne-based luxury developer Lion Property Group to be wound up, finding not only that the group was insolvent and that it was just and equitable to order the winding up, but also that the group was operating an unregistered managed investment scheme in breach of the Corporations Act 2001 (Cth). Meanwhile, the Victorian Police is now believed to be pursuing a criminal investigation into the group.

Lion Property Group was placed into provisional liquidation on 2 July, with John Lindholm and Emily Seeckts of KPMG appointed as provisional liquidators. The plaintiffs were a group of investors who sought winding-up orders following significant concerns raised by Mr Lindholm and Matthew Hutton of McGrathNicol, who were previously appointed as independent accountants, and later confirmed by the provisional liquidators.

Their investigations revealed that, since 2018, the group had raised about $122 million from around 600 investors across 18 property development projects in Victoria and Queensland. Funds were meant to be quarantined within individual special purpose vehicles (SPVs), but instead were pooled through the head company, Lion Property Group Pty Ltd, and often diverted to unrelated projects and related-party entities. The provisional liquidators also found evidence of intercompany loans, payments to related parties without a clear commercial basis, early write-offs of debts, and investor repayments funded from newer investor contributions rather than project proceeds, raising the spectre of a Ponzi-style operation.

The financial position was dire: as of June 2025, the group collectively held less than $5,000 in cash, with over $5.2 million owed to unrelated unsecured creditors and $62.9 million in secured debt. Construction on many projects had halted, secured creditors had taken possession of multiple sites, and the directors (John Sader and Garry Pesochinsky) had effectively abandoned management. The Court accepted the provisional liquidators’ assessment that the group and its SPVs were insolvent under the cash flow test, notwithstanding that a handful of projects might appear solvent on a balance sheet basis depending on the classification of investor claims.

The Court also held that winding up was justified on the “just and equitable” ground under s 461(1)(k) of the Act. The Court emphasised the total lack of confidence in management, widespread intermingling and misuse of investor funds, and the risks to the public of allowing the group to continue. The Court also found that the group was operating an unregistered managed investment scheme in breach of the Act, which provided an additional ground for winding up.

Orders were made to wind up all the corporate defendants and the group scheme, with the provisional liquidators appointed as liquidators. The Court also granted a temporary injunction restraining Mr Sader and Mr Pesochinsky from dealing with assets of certain additional related entities, required them to file affidavits identifying servers and email accounts, and allowed the liquidators to share their confidential report with ASIC and Victoria Police, the latter of whom had approached them for it.

The decision can be found HERE.

Professionals involved:

• Justin Graham KC of List A Barristers (instructed by Peter G Richards Lawyers) for the plaintiffs

• Declan Peacock of the Victorian Bar (instructed by James D Mapleston) for John Sader and Garry Pesochinsky

• Amy Green of Mills Oakley) for the plaintiffs in proceeding no S ECI 2025 01398

• Jahn Kanoun of Broadside Lawyers for BizCap Pty Ltd, an interested party

• Joel McGillivray-Bove of Romans & Romans Lawyers for Aurelien Berson Pty Ltd, an interested party