Fridae

Investigators in Sydney have on Tuesday started a probe into Gay Games Ltd, the company formed to put on the 2002 Gay Games in Sydney, Australia's ABC News reports.

The company, which was has been forced into bankruptcy, owes creditors an estimated A$2.5 million after revenue projections were not realised.

Peter Marsden from RSM Bird Cameron Partners who has been appointed to oversee the firm's finances said that revenue projections were off from the beginning and that organisers had set their sights too high. He also attributed part of the problem to the terrorist attack on Bali shortly before the games began.

"The timing was probably unfortunate," he said. "The Bali bombings in September had a significant impact on the number of people that actually came to Australia for the Games."

Marsden, who has been retained as the company's administrator at the creditors' meeting on Monday, will prepare a report on the company's finances and future options.

According to the Sydney Star Observer, despite early estimates that have set the debt at about $2.5 million, some of the creditors' applications for funds have been disputed by Gay Games directors. Sydney 2002 has provided statements showing A$780,000 worth of assets - which has yet to be confirmed.

Of the amount, Marsden said A$235,000 was in cash, A$8,000 in plant equipment, A$25,000 in miscellaneous bonds and A$518,000 was owed to the Gay Games by other organisations.

All the funds from Ticketek, which managed ticket sales to most of the Games' events, has been released and is not included in the A$518,000 worth of debts yet to be recovered.

Marsden said it would be difficult to determine when Sydney 2002 Gay Games became insolvent or unable to pay it's debt obligations as they become due.

If the company was found to be trading while insolvent, the directors could be personally liable.

Among the creditors are the Royal Botanic Gardens, who are owed more than A$32,000, the Sydney Aquatic Centre, which hosted the swimming carnival and Oceania Party (A$64,636), musician Peewee Ferris, owed A$25,950 for music production, and major Games sponsor Qantas (A$224,067). The Australian Taxation Office is owed A$315,000 and the Federation of Gay Games more than A$426,000.

The next meeting of creditors has been set for Monday, 6 January.

Earlier this year, the Sydney Gay and Lesbian Mardi Gras was also forced into bankruptcy after posting a US$500,000 loss. The annual festival has since been taken over by and will go ahead, but in a much smaller way. In 1998, the Gay Games held in Amsterdam posted a US$1 million loss.