Leisure magnate may be left with just two pubs

Now the reclusive 58-year-old's unpretentious lifestyle reflects his financial circumstances.

Only two of Mr Hedley's hotels are unaffected by the collapse of his empire: the Aussie Inn Hotel in South Australia and the Lakeview Hotel in NSW. They are both leased from the publicly listed Hedley Leisure and Gaming Property Fund.

They could be all Mr Hedley has left, as most of his partially built residential developments will likely be sold to repay bank debts.

A Korda Mentha partner, Robert Hutson, who is receiver of most of Mr Hedley's assets on behalf of the ANZ Bank, said Mr Hedley had been battling to save the empire since Christmas by offloading whatever assets he could.

But his attempts were futile. Mr Hutson blames the collapse on margin loans over most of Mr Hedley's 57 per cent stake in HLG.

"I don't know the extent [of the margin loans] but I understand it was substantial. It was big enough to bring down a group of this size," Mr Hutson said.

However, other industry sources said the margin loans were a convenient scapegoat, when the real reason for the collapse was simply too much debt and too many pubs bought at the top of the market.

Mr Hutson said Mr Hedley may attempt to regain control of the 10 pubs he owns through private companies by proposing a deed of company arrangement, a move other industry sources said was unlikely given his massive debts.

The appointment of receivers to these 10 pubs and over the company which owns a 16.5 per cent stake in HLG has destabilised HLG, which itself is weighed down with debt.

HLG yesterday conceded the Hedley pubs represented 11.5 per cent of HLG's total rental stream. Shares in HLG fell by 24 per cent, to 19c, before the company put the shares into a trading halt.

After the halt was lifted the company conceded that the appointment of Korda Mentha to one of Mr Hedley's private companies, Hedz Ltd, had triggered HLG to breach its loan covenants on its $745 million of loans from a syndicate of banks headed by the ANZ.

The chairman of HLG, Colin Henson, said his company had asked the banks to waive the breach.

ANZ, owed nearly $200 million, has appointed Korda Mentha to assets held by nine of Hedley's companies which own his Queensland construction business and his 10 pubs across three states.

Suncorp, owed an unknown smaller sum, have appointed Ernst & Young receiver over development sites owned by five of these companies as well as a 16.5 per cent stake in HLG.