Final nail in coffin for Calombaris empire
Creditors owed money by the collapse of George Calombaris' MAdE Establishment company have voted to liquidate the 22 businesses that made up his restaurant empire.
A meeting held at 3pm at the Rialto Towers Melbourne offices of restructuring experts KordaMentha heard administrators, led by KordaMentha's Craig Shepard, recommend to end efforts to save the businesses as "they are now insolvent".
To avoid coronavirus problems, many of the creditors' votes were lodged by proxy with voting power handed to delegates, with only two creditors in the room.
"In our view, the winding up of all companies in the group is the most viable option for creditors in that the liquidators will be in a position to wind up the affairs of the group and realise the group's remaining assets for the value of creditors," administrators said.
"It is our opinion that it would be in the creditors' interests for each company in the group to be placed in liquidation."
The administrators argued the move would help employees get the remaining entitlements owed to them.
"The liquidation of all employing entities in the group will allow employees access to the Commonwealth Government Fair Entitlements Guarantee scheme with respect to their outstanding entitlements."
Administrators say "priority creditors" - that is the staff owed leave and redundancy payments - are owed $1.3 million. The collapse saw about 400 workers out of a job.
All of the staff's outstanding wages were paid the day before the collapse.
The MAdE Establishment empire collapsed late in the afternoon of February 10, seeing the closure of its 12 restaurants.
The main secured creditor, the Commonwealth Bank, is owed a whopping $8.8m and the report says "we do expect there to be a return to the first ranking secured creditor". It has previously been estimated the CBA would get back $1 million.
Unsecured creditors - including tradespeople and suppliers - have been told they will receive nothing back.
KordaMentha has now sold five restaurant leases but said they did not expect to make any more sales of the remaining seven.
The Stalactites Group - which runs the 41 year old Lonsdale St Greek food favourite Stalactites - have confirmed they have finalised the purchase of two key Jimmy Grants stores - Emporium Melbourne and Fitzroy.
It will transform the two Jimmy Grants sites into Hella Good branded stores.
And Calombaris' rebranded Crofter Dining site - which had previously been a Hellenic Republic - has been taken over by the husband and wife team Andrew and Pam Kavanagh, who run the barbecue focused The Que Club in Fitzroy North.
Last week KordaMentha revealed the MAdE Establishment company racked up $20.7m in losses in the three and a half years leading to its February collapse.
The fall into administration of the companies behind the Hellenic Republic and Jimmy Grants brands followed a horror summer in which sales fell amid a broader industry downturn and as the business was beset by reputational damage following its $7.8 million underpayment scandal.
The report says the collapse can be attributed to "declining revenue and profitability across the group following the group's self-disclosure to the Fair Work Ombudsman of wages underpayments at a number of venues".
"The group has not been profitable in the past three financial years or for the year to date period to January 2020.
"Cumulative losses before tax over this period total $20.7 million," the report says.