Everleigh Group strikes deal with creditors to keep Heartbreaker open
The hospitality groups behind Heartbreaker, Bar Margeaux, Connie’s Italian Diner and The Everleigh hit a million-dollar financial hurdle after Heartbreaker fell into insolvency.
Despite the $1.5 million debt, The Everleigh Group struck a deal with creditors to keep Heartbreaker’s door open.
Heartbreaker opened in 2015 in Melbourne’s CBD as a late-night bar with a rock ‘n’ roll atmosphere. It was placed into voluntary administration by its owners, Michael and Zara Madrusan, in October this year.
According to a report by Dye & Co administrator Adrian Warry, the venue has debts of just under $1.5 million, including up to $171,909 owed to employees for leave and redundancy entitlements.
More than $400,000 is owed to unsecured creditors, which includes $171,295 to ANZ, $84,373 to system software business Square and $42,776 to non-bank lender Pepper.
A further $591,312 is owed to other creditors including $476,542 to the Australian Taxation Office and $49,839 to the Victorian State Revenue Office.
The Madrusans are set to pay a $410,000, with an initial payment of $50,000 followed by monthly payments of $20,000 to settle creditor claims.
Outstanding employee entitlements will also be paid and unsecured creditors including suppliers will get 26 cents on the dollar.
The administrator’s report shows that Heartbreaker was profitable until it started making loans to other businesses in The Everleigh Group which they can’t pay back.
“It appears that the company profits generated by the company have been used to fund the operations of other entities within the group which has placed significant financial strain on the business despite it trading profitably,” Warry said.
Venues in the group that are under financial stress include Bar Margaux, Navy Strength Ice and The Everleigh, which made the highly coveted World’s 50 Best Bars list in 2013 and 2014 and won Australian Bartender Cocktail Bar of the Year in 2018.
Madrusan told the Herald Sun times were challenging.
“Looking at restaurants and breweries being forced to close on a daily basis is really sad and the industry isn’t getting the support it needs to thrive in Melbourne,” she said.
“(For us), we didn’t really feel the impacts of Covid until later on. The costs involved in restarting the businesses were large – switching everything back on and re-employing staff.
“In lockdown there was some support but that’s no longer available to us.”
Ms Madrusan has called for incentives to support spending in the sector.
“The cost of food and alcohol and rent, everything. None of those things have been held. And there’s also a pressure not to raise prices,” she said.
“Margins across the board are slimmer than they’ve ever been.
“There needs to be celebration for the small businesses that are fighting hard to survive and deserve to get attention.”
Despite this, Ms Madrusan said she was forward to Melbourne’s peak festive season.
Jonathan Jackson, 28th November 2024
