Was Lume trading for two years while insolvent?

A new report by liquidator CJG Advisory has revealed popular South Melbourne restaurant   Lume may have illegally traded while insolvent since June 2021.

According to the liquidator, the venue, which was in dire financial straits, racked up more than $250,000 in losses.

Staff are unlikely to receive their entitlements.

Lume entered voluntary liquidation in June 2023.

The resignation of executive chef Diego Hubert Chabert along with another 10 staff quitting en masse, forced the restaurant into liquidation.

The restaurant was alleged to owe creditors more than $1 million, including tens of thousands of dollars to suppliers and staff.

“My preliminary view is that the company may have traded whilst insolvent since at least June 2021 on the basis of the company’s financial position,” the liquidator report read.

“I have not performed a detailed analysis of the debts incurred since insolvency; however it is likely to be in the vicinity of $600,000 to $700,000.”

The report found Lume had just $13,701.23 in the bank when it collapsed and had racked up $254,484 in losses since June 2021.

Lume director Erez Shahak said: “We never did anything illegal”.

Chabert estimates he is owed up to $17,000 in unpaid annual leave and superannuation.

The popular chef applied for remuneration under the government’s Fair Entitlements Guarantee (FEG) scheme but was unsuccessful as he wasn’t an Australian citizen and didn’t hold a permanent visa.

In fact, 90 per cent of Lume staff is in the same boat.

“Some people were in shock. You work so hard for a business and come to a country which ....if you (aren’t) a citizen, you don’t have any rights.”

The Herald Sun recently exposed Shahak’s lavish lifestyle, which included two multimillion-dollar Brighton properties, luxury cars and private schools for his children.

He was also under investigation for relabelling scam, with food safety authorities probing his food manufacturing business Quality Food World. It is claimed the business was relabelling “best before” dates on cheese before selling to stores.

Shahak did give staff some hope.

“Any person that is owed money we will try and resolve it. We are trying to do the right thing,” he said.

ASIC was informed but is unlikely to take action.

Trading while insolvent can attract fines up to $200,000- or five-years imprisonment in Australia.

Jonathan Jackson, 27^th September 2023