Ballarat Gold Mine administration: Singapore's Dr Jean-Michel Paul offers to pay debts as owner contests Hall Chadwick

Singapore-based Belgian business magnate Dr Jean-Michel Paul is backing mine operator Balmaine Gold Pty Ltd in its claim the appointment of external administrators on March 8 was unlawful and improper and should be terminated as soon as possible to prevent further damage to the business.

An email to Balmaine Gold creditors dated March 17, reveals Mr Paul's intention to "purchase debts owed by Balmaine at full value".

The email, authored by commercial law firm Ashurst Australia Ltd on behalf of Mr Paul's company Tomson Pte Ltd, asks creditors to "provide us with a copy of any invoices in relation to the debt owed by Balmaine to you so that we can substantiate the debt".

It states payment will be made immediately after the creditor provides their bank details and returns signed documentation.

It further states the offer expires at 10am on Monday, March 20.

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Attached to the email was a proxy form for use at an upcoming creditors' meeting, where it's expected an attempt will be made to boot out appointed administrators from accounting firm Hall Chadwick and return Balmaine's stewardship to its Singapore-based directors.

A notice to the Singapore stock exchange on March 13 flagged Balmaine's intentions to contest the administration in court, arguing that even if the Hall Chadwick's appointment "may be technically valid", it could be set aside on the grounds the gold mine business was solvent or if relevant sections of the Corporation Act were being "abused".

The contest began on Thursday, March 16, when Balmaine's legal team made an urgent application to the Federal Court of Australia to set aside Hall Chadwick's appointment.

Balmaine's lawyer argued the company's late $25,000 interest payment on a $2.2 million loan was not a valid trigger for appointing administrators, and that the court should immediately grant an injunction stopping Hall Chadwick doing its work.

The court heard creditor GI 306 Pty Ltd sent Balmaine an email reminder about the outstanding payment at 3pm on March 8.

Within a few hours, and with no further communication, GI 306 took the "drastic" step of appointing external administrators, the lawyer said.

The court heard the mine site's manager resigned their position shortly thereafter "as a result of the uncertainty created by the administration".

Balmaine's lawyer said the "detriment and prejudice" to the business and its directors resulting from Hall Chadwick's appointment was "self-evident," and creditors including Mr Paul were concerned it could "prevent recapitalising efforts".

The lawyer argued the business was solvent and back on track to being a "significant profitable enterprise," despite "temporary liquidity constraints" in the recent past.

The court heard Mr Paul - Balmaine's largest secured creditor and a former company director - had signed a heads of agreement relating to a "significant injection of capital and a significant loan" to assist with a restructuring plan.

Balmaine's lawyer said past issues including a $4.5 million dispute with the Earth Resources Regulator had been resolved, and that with Mr Paul's support, there was "evidence of a turnaround in the performance of the business" since January this year.

"We have a company that, in terms of its balance sheet, is looking healthy," the lawyer said.

"We accept there's been short term liquidity issues but they're being dealt with."

Lawyers for Hall Chadwick and GI 306 disputed Balmaine's claims, arguing they had evidence the business was insolvent and it would be inappropriate to put its directors back in charge.

Justice Mark Moshinsky dismissed Balmaine's interim injunction application and adjourned the matter on the grounds Hall Chadwick and GI 306 had not had sufficient time to gather evidence justifying Hall Chadwick's appointment.

The parties will return to court for a full contested interlocutory injunction application on Wednesday, March 22, pending the outcome of the first creditors' meeting scheduled for Tuesday, March 21.

Further information obtained by The Courier reveals Mr Paul has been providing Balmaine Gold financial support since February 2022 and has been a director twice: briefly in October 2022 and from November 2022 to the end of January 2023.

It's understood Mr Paul is currently owed $9.5 million, while Balmaine's unsecured creditors are owed about $10 million.

Mr Paul on March 10, 2023 entered into a term sheet with Balmaine's directors offering $10 million loan to fund development of the mine, on the condition he is made a 51 per cent shareholder and gets the right to nominate directors.

The loan is payable by December 2026.

Insiders say it's curious that GI 306 a "relatively minor creditor" appointed Hall Chadwick within days of Mr Paul's loan offer.

The $2.2 million loan from GI 306 was due to be paid in full in May this year, and the late $25,000 interest payment, which was due on February 16, was made on March 9.

Some have called the actions of GI 306 "vexatious" and speculated they may have been coordinated to derail Mr Paul's efforts to effectively buy the business.

Balmaine's lawyer said Hall Chadwick's appointment came about in "very strange circumstances" and that Balmaine would be disputing that there was a default.

Creditors at Tuesday's meeting in Ballarat are expected to vote on three options: keep the administration in place as is, appoint a different administrator, or give the company back to its directors.

One name in the mix as an alternative administrator is Kordamentha, however it is understood Mr Paul's financial backing is contingent on the mine not being in administration.

The Australian Workers' Union is expected to have significant sway over the vote, as the mine employs about 200 people.

It's unknown if Mr Paul will attend the meeting in person but a source close to the case said he travels to Australia often and there was a high possibility he was in the country.

The source said Mr Paul was "very passionate" about the Ballarat Gold Mine and its long-term future, and had been "frustrated" with the current directors' responses to recent management and operational issues, including ceasing operations in October 2022 because the mine's tailings dam was nearing capacity.

Operations resumed in December 2022 and since January 2023 the mine has been producing higher grade content ore compared to previous years, Balmaine's directors say.

This, combined with the strength in the value of gold and rising inflation has boosted confidence in the business after the setbacks of 2022 led to reduced production and sales.

Balmaine is locked in a separate legal battle with former mine manager Arete Capital whose contract was terminated in October 2022.

An active planning application is before the City of Ballarat Council proposing to expand tailings storage at the Mount Clear mine site.

The council confirmed this week it had had no contact from the mine's administrators regarding the application.

Mr Paul is founder and CEO of UK-based Acheron Capital and Singapore-based Real Estate Analytics (REA).

Online profiles state he has a Phds in finance and real estate from the University of California at Berkley.