Minutes filed with ASIC of last month’s meeting between creditors and KPMG administrators David Kidman and Martin Lewis reveal that three creditors – including the Australian Taxation Office – rejected a proposed deed of the company’s arrangement for the Living Room Bar, the Zonfrillo company that operated the internationally acclaimed Rundle St Orane restaurant.
Orana closed in March, citing the coronavirus pandemic, but never reopened. The celebrity chef placed the business into administration in October, along with Blackwood Bistro Pty Ltd, the operator of Orana’s sister restaurant on the ground floor, which closed suddenly at the end of 2019.
Last month, creditors voted to accept Zonfrillo’s proposal, which would see all paid staff and other unsecured creditors split $101,000 between them – an amount trustees estimated would net between 6.6 and 10.1 cents in the dollar for Orana’s creditors and between 5.0 and 8.3 cents in the dollar for Blackwood’s backers.
The administrators recommended that the two settlement offers provided “a more certain outcome” than the liquidation of the companies – which would have occurred if the DOCAs had been rejected – saying: “We are of the view that the creditors should accept the DOCAs offered”.
Voting rights were also granted for several “related party loans” to the businesses of Zonfrillo and his wife Lauren, who according to documents owed The Living Room Bar $170,000 and $523,000, respectively, while Lauren’s company Pulse Collective owed $11,000 and “Zonfrillo Consulting” claimed $674,000 – a total of $1,378,000.
Blackwood owed a total of $842,000 in loans to related parties – including $657,000 to the Living Room Bar (Orana), $60,000 to Zonfrillo as “director” and $125,000 to Zonfrillo Consulting.
The minutes of the meeting of creditors reveal that the proposal to accept Living Room Bar DOCA passed by nine votes (totaling $1,424,844 in debt) to three (totaling $511,360).
However, attendee Vishnu Sinnathamby, representing the Deputy Commissioner of Taxation, asked “the President to inform him of the number and value of related creditors and unrelated creditors voting for the resolution”.
This revealed that the four related creditors — effectively the Zonfrillos and their related companies — accounted for $1,377,929 of the total votes to accept DOCA, while the remaining five unrelated creditors accounted for just $46,915.
In such a ballot, a resolution passes if it is passed by a majority in number of voters and in total value of the debt – if the majority in number and the majority in value of the total claims vote differently, the administrator has the deciding vote.
For the Blackwood DOCA, the director (Zonfrillo) and Zonfrillo Consulting (owed $185,000 between them) voted to accept the DOCA, while the Living Room Bar (Orana, owed $657,000) abstained.
Another unrelated creditor, which owed just $1,636, voted to accept the proposal, while another (the ATO – which owed $29,034) voted against.
At the end of the meeting, Sinnathamby “stated that he would like it to be noted that as Deputy Commissioner of Taxation’s Chief Executive Officer, he voted against DOCA resolutions relating to both The Living Room Bar and Blackwood Bistro”.
Lisa Andonis, for the Rundle East Corporation – the owner of the properties owned by Maras – also requested that it be “noted that as the general agent of Rundle East Corporation, she voted against the DOCA resolution regarding The Living Room Bar”.
The minutes also note that Andonis “noted that potential breaches of directors’ duties will not be investigated in a DOCA scenario and indicated that, in his client’s opinion, the funds to be paid into the DOCA proposal for each of the companies were insufficient”.
Maras Group chief executive Steve Maras said today “we are considering our options” in terms of potential legal action.
“DOCA is what it is – but we will look at the options available to us,” he said.
At the meeting, Sinnathamby also questioned why the directors considered the date of insolvency for the two companies to be November 25 last year, with Kidman replying that “Blackwood went out of business in November 2019 and both entities were intrinsically linked, including with Blackwood as a subcontractor. – tenant of the Living Room Bar”.
“Furthermore, the date of November 25, 2019 was the date each of the restaurants entered into a revised payment plan with the Australian Taxation Office – which they both subsequently breached in early March 2020,” the lawsuit states. -verbal.
Andonis also questioned the deletion of a cautionary note on the sale of Zonfrillo’s Adelaide Hills propertyand were told “that the directors understand that the caveat was placed on the manager’s former home by a creditor of Blackwood Bistro, Thorn Business Finance, in respect of a personal guarantee – which presumably provided Thorn the possibility of placing the caveat on the old property”.
“The chairman advised creditors that the manager and his wife had sold the house in the Adelaide Hills in 2020 and the warning was lifted after Blackwood Bistro paid the $46,000 amount owed to Thorn,” indicate the notes.
“The President indicated that such a transaction could result in an unreasonable administrator-related transaction for The Living Room Bar or an unfair preference for Blackwood Bistro, noting in the report that both transactions are only potentially recoverable in a liquidation scenario and are unlikely to result in a net return to creditors.
Sinnathamby asked if The Living Room Bar “could have been insolvent before November 25, 2019 – and as far back as June 2019”, Kidman stating “it was possible that the businesses were insolvent before November 25, and eventually it is a date decided by a court”.
“The President also advised that even if the companies were insolvent prior to November 25, this did not change the fact that the Director had no material assets to respond to any insolvent claims that may be brought,” the minutes read. .
Local news matters
Media diversity is under threat in Australia – nowhere more than in South Australia. The state needs more than one voice to guide it, and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.