Gold Coast cafe in liquidation after real estate stoush
A Gold Coast café has been placed into liquidation after claims were made that it was trading insolvent.
The fate of the Sandbar Cafe, on the Esplanade at Surfers Paradise was put into the Supreme Court’s hands after a disagreement between real estate agents.
The court ruled last Friday to put the company behind the beachfront eatery into provisional liquidation.
Questions over 52 The Esplanade’s solvency, as well as the non-payment of a high-interest loan, was enough for the court to suspend its operations.
The company directed by high-profile commercial agent Greg Bell also has a tax debt of more than $370,000.
Bell is listed by the Australian Securities and Investments Commission (ASIC) as sole director of 52 The Esplanade. His other company - 4 Orchid Avenue - is a 50 per cent shareholder.
A company directed by Ipswich realtor Ajay Bakshi holds the other 50 per cent. It was Mr Bakshi who sent 52 The Esplanade to court.
The Esplanade was purchased in June 2020 from owners Jo-Anne and Greg Short for $520,00.
The Shorts started the business in 1988 and settled on the sale in November 2020.
Mr Bell and 4 Orchid Ave, along with Mr Bakshi and his company 100 Brisbane Street, were guarantors for a $632,000 loan to purchase the café. It was secured against three properties registered to Mr Bakshi including his home and the cafe business and its assets.
The loan was set to be paid in full by November 20 this year, but was defaulted from October.
The default incurred more than $30,000 a month in interest with a balance rising to $723,000 by November 12.
Court documents show the lender issued a demand for possession of the secured properties.
In a court affidavit, Bakshi said he believed the cafe was trading insolvent; that he’d been denied access to financial records; that the company owed more than $300,000 to the tax office; that it was behind in rent; that it was in debt to suppliers and also owed superannuation and other entitlements to staff.
Bell had resisted a liquidator claiming Bakshi lacked standing to make the application. He also claimed Bakshi was not a shareholder despite his company being registered with ASIC as a shareholder.
Bell claimed Bakshi was holding the assets in trust for Bell’s business partner Kevin Carey and denied the company was trading insolvent.
Bell and Carey had previously operated Gilley’s Bar.
In his affidavit Bell claimed he and Carey wanted to help Mr Bakshi who “had defaulted on his personal mortgage affairs”. In exchange for helping him retain his properties, they were to be used as security against the Sandbar loan.
Carey then transferred a vacant block of land worth $150,000 into Bakshi’s name and loaned him $28,000 to meet his mortgage repayments, the affidavit said.
Mr Bell’s affidavit said Mr Bakshi was only listed as a shareholder in the Esplanade company because the lender required it.
“It was agreed and understood that the shares were merely held by Mr Bakshi in a position of trust as was required by the lender”, the affidavit said.
“It is within my knowledge that at no time has Mr Bakshi made any payment for a purchase of shares, made any payment for the purchase of property, repaid any loan made to him, or made any financial contribution whatsoever to the purchase and operations of Sandbar,” Mr Bell said in his affidavit.
“In fact, it is my view that Mr Bakshi ought to be considered a debtor of the company where he has been enriched with property and funds for which he has failed to return or repay.”
Judge J Kelly found that, as a shareholder, Bakshi’s company did have sufficient standing to apply for the liquidation.
“There was a notable lack of exhibited material correspondence, financial records or books of account and there was also a distinct lack of detail and proof of any facts underlying the denials and assertions contained in the affidavits,” the Judgement said.
Judge Kelly appointed Terry Rose as provisional liquidator of 52 The Esplanade.
Irit Jackson, 7th December 2021
