How a failed gym cost 54 creditors $3.8m
Within 14 months of Embody gym founder Scott Capelin gleefully accepting this $500,000 cheque from investor Tim Cox, the company was in liquidation and Mr Cox had lost everything.
"I lost half a million dollars … I'm appalled," Mr Cox said.
"We have a social duty to try to expose what (has happened) so that no one else becomes a victim."
Fifty four creditors owed debts of $3.8 million were told on Tuesday that Mr Capelin and his friend Matt Malouf allegedly removed workout machines from the Neutral Bay gym three months before Mr Capelin shut it down in December.
The duo arrived at the gym on Saturday September 22 with a truck and removed 21 pilates machines from the premises, surprising the customers who were there working out.
"The truck then returned on Monday morning with the machines, which they had since registered on the personal properties securities register," liquidator Guy Baxendale said at the creditors meeting yesterday.
Once the gym was liquidated in December Mr Baxendale began looking at what assets he could seize to sell at auction to recoup some of the $3.8 million owed to the 54 creditors.
He managed to seize four fridges, some yoga lamps and a body fat testing machine but the pilates machines - worth $3000 each brand new - were off limits.
"My lawyer had a look at it and said we can't seize them as assets because they have registered PPSR ownership over them," he said.
"These guys have been packaging this (liquidation) up for months beforehand."
Mr Capelin and business coach Mr Malouf are friends and are both directors of companies affiliated with the gym.
Mr Malouf did not respond to requests to comment
Fifty four creditors attended yesterday's creditors meeting either in person, on the phone or via proxy, with 53 of them authorising to pay the liquidator to investigate the financial affairs of Mr Capelin.
Creditors include former employees, personal trainers, customers, investors, utilities companies, the Office of State Revenue and the Australian Taxation Office.
Mr Capelin did not attend the meeting in the Parramatta, and did not respond to questions sent to him by The Daily Telegraph.
"Scott Capelin voted against the funding agreement to investigate the company … He's voted against the funding for obvious reasons," Mr Baxendale said.
According to official documents filed by Mr Capelin on December 11, the business - trading under the name Caprahme Pty Ltd - has just $210,531 in assets and a total of $3.8 million in debts.
Of these assets, only $10,231 have an estimated realisable value, meaning the other $200,300 in assets are totally worthless.
According to the documents there are 14 employees who are owed a total of $118,110.
There are also nine unsecured creditors, which the company owes $3,679,750, bringing the grand total owed to $3,797,860.
The remaining group of creditors are customers who are seeking a refund of the $20 gym fees charged to them during December after the gym closed down.
The investigation is expected to take several months.