The Australian government was granted permission by a court on Friday to prepare legal action against coal baron Nathan Tinkler as creditors close in on the former billionaire, threatening to end a rags-to-riches story built on the nation's mining boom.
The New South Wales Supreme Court gave the Deputy Commissioner of Taxation leave to prepare a case against Tinkler's holding company, the latest of a series of legal actions over unpaid bills and commercial disputes.
Further adding to Tinkler's woes, court documents also showed an Irish racehorse stud owned by Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, has subpoenaed Tinkler personally to provide information in an unrelated case.
The emergence of two new, powerful potential foes is likely to unsettle Tinkler's lenders and raises questions about the future of his main asset, a near one-fifth stake in Whitehaven Coal, Australia's largest independent coal miner.
Court documents show the Kildangan Stud Unlimited subpoena is to be heard by another New South Wales state court next week.
Kildangan is part of Darley, the global breeding operation owned by Sheikh Mohammed, a keen equestrian and breeder with horse studs around the world.
Located in County Kildare, Ireland, the Kildangan Stud is home to eight stallions, including Sharmadal, the sire of two winning mares, Marquardt and Happy Hippy, bought by Tinkler's Patinack Farm.
"This is a commercial matter between Kildangan Stud and Mr Tinkler relating to thoroughbred stallion nominations and we have no further comment on the matter," Darley's managing director Joe Osborne told Reuters in an email.
Stallion nominations involve fees for broodmares to mate with selected stallions.
"He's exposed to great liability," Marina Nehme, a senior law lecturer at the University of Western Sydney, told Reuters. "It's like a house of cards falling."
Tinkler, 36, enjoyed a heady rise from mining pit electrician to Australia's youngest billionaire in just a few short years, riding on the back of the country's once-in-a-century mining boom.
But a slide in coal prices has hit his net worth and a series of lawsuits have followed.
Liquidators were appointed this week to two firms of which he is director, Patinack Farm Administration Pty Ltd and Mulsanne Resources Ltd, over debts totalling more than A$28 million.
Tinkler paid creditors A$500,000 ($520,000) this week to stop wind-up petitions against Tinkler Group Holdings Administration Pty Ltd.
But the relief was short-lived when the Australian tax office stepped in to take over the action as a potential creditor. Senior deputy court registrar Rebel Kenna gave the tax office until Dec. 10 to prepare a case against the company.
The Australian Taxation Office declined to provide any further details on the case.
Andrew Korbel, a partner at Corrs Chambers Westgarth, who represented Tinkler Group Holdings Administration on Friday declined to comment outside court. Tim Allerton, a Sydney-based spokesman for Tinkler, also declined to comment.
Tinkler spent millions of dollars building Patinack into Australia's largest thoroughbred racing and stud operation.
He built his empire spanning horse racing, sports clubs and coal on debt, scraping together A$1 million from lenders for an underrated coal deposit that quickly soared in value.
He then leveraged his gains in a series of bold moves, culminating in the $5 billion merger of his companies Aston Resources and Boardwalk Resources with Whitehaven this year.
But Nehme said the combined legal actions raise the spectre of several unpleasant scenarios for Tinkler, including civil and criminal charges if he is found to have been operating the liquidated companies while they were insolvent.
The value of Tinkler's holding in Whitehaven has shrunk below A$600 million from A$1.1 billion at its peak as Chinese demand for coal cooled.
Sources previously told Reuters the stake is heavily leveraged. His main backer, US hedge fund manager Farallon Capital Management LLC's asset manager Noonday, has been looking at options including pressing for the sale of shares or converting some of the loans into equity.
"Additional pressure from entities including the Australian Taxation Office puts pressure on Noonday and Farallon to do something about Tinkler's stake," said Matthew Trivett, a coal and speciality metals analyst at Patersons Securities.
Noonday and Farallon could call in the loans to ensure the transfer of ownership of the stake before other creditors begin chasing the stake, Trivett said.
They would likely take a hit, but might decide to "book the loss to take the assets away from Tinkler," Trivett said.