Staff have been left fuming after an arm of a major hospitality chain collapsed into liquidation owing them thousands of dollars while other parts of the business continue to operate.
Last week, news.com.au reported that Melbourne-based Legacy Hospitality Group Pty Ltd went into voluntary liquidation.
It had debts of $1.725 million, the bulk of it tax debts, but also a further $172,000 was owed to 241 staff members from unpaid superannuation, according to a report filed with the corporate regulator and compiled by the appointed liquidators, Andrew Knight and Sebastian Hams of insolvency firm KordaMentha. There are government schemes in place for unpaid wages if a company goes under, but this does not yet extend to recovering unpaid super.
The Legacy group is spearheaded by Benny Avramides, a well-known figure in Australia’s catering scene who has launched a number of hospitality venues across Melbourne including his flagship catering service Tommy Collins and other more casual bar and dining experiences such as Hamptons Bakery, Ladybird Cakes and the Rumour Has It cafe.
All these businesses are “part of the broader Legacy group”, according to the liquidators, and continue to operate as normal.
Although some staff worked across the group’s numerous brands, they were technically employed by Legacy Hospitality Group Pty Ltd which means all their superannuation sits with the now-defunct entity.
“I’m so angry,” James*, an employee who has worked in several brands of the group for several years, told news.com.au.
James believes he is owed up to $3000 from his superannuation entitlements which haven’t been paid since March.
According to the restaurant worker, staff received an email in July from the company’s CEO, Mr Avramides, outlining his plans to “streamline” the business with no mention of the upcoming liquidation.
“An important change … will be taking place in our organisation,” the email, dated July 11, read.
“We are streamlining our business operations and will be implementing measures to enhance operational efficiencies which includes streamlining intercompany transfers, requisitions, and employment opportunities.”
James said he had to sign a new employment contract in July and around the same time their pay run changed from weekly to fortnightly, but he didn’t think too much of it.
But then in mid-October, staff received an email from the liquidators informing them that the company that had previously employed them had gone bust.
Do you know more or have a similar story? Get in touch | alex.turner-cohen@news.com.au
James said many were “dumbfounded” to learn it was in liquidation.
In yet another email to staff following the liquidation announcement, Mr Avramides said: “Please accept my apology for any stress this may have caused.
“It’s a very structured and official process, and clearly presents as such, however please rest assured there will be no negative or financial impact on our staff or suppliers, including all employee entitlements (leave & super, which will all be paid in full) and any outstanding invoices.”
But when the issue of superannuation payment came up, James claimed “no one can seem to answer me” or give a clear timeline of when he will get his money.
“I could be earning on my super,” he lamented, adding that he had to “trust them” to do the right thing and pay his super, when there is no guarantee it will be paid now that the business is in liquidation.
“When you’ve got a business which is struggling to pay its tax, what if the tax man comes tomorrow and takes that (money) in the bank account” which may also be used for employees’ superannuation, he added.
“It’s this not knowing. This is the thing that’s disappointing me the most.”
Mr Avramides previously told news.com.au “It’s a really tough time for our industry and we’re working through this with the team at KordaMentha to remain compliant and ensure our staff are looked after and paid their entitlements”.
He did not respond to further requests for comment.
Following news.com.au’s article last week revealing that the company had gone under, Mr Avramides sent another email to staff apologising profusely about the situation.
“I want to begin by offering my sincere and unreserved apology to you all for bringing concern and stress to our Group, especially at a time when I’m sure it’s the last thing anybody needs,” he wrote last Thursday.
“For those who may not be aware, I recently made the regrettable, and ultimately unavoidable decision, to enter the LHG brand into Voluntary Liquidation.
“I engaged a firm called KordaMentha to help us navigate the process, establish debts, and help us resolve to pay those creditors as best and as quickly as possible.”
Later on in the email, the hospo boss added: “Our venues and production kitchens continue to trade and it’s business as usual as we can continue to work together to deliver great hospitality as we’ve always done.
“To everybody past and present, I want to again apologise. I take responsibility and can’t tell you how much this hurts to have to work through this, and I’m committed to making it right and will do everything in my power to do so and ensure the wellbeing of our team remains a top priority.”
According to a circular sent to creditors in mid-October, Legacy Hospitality Group owes $1.725 million in total to 258 creditors.
Of the company’s liabilities, the largest chunk is owed to the Australian Taxation Office, sitting at $1.58 million.
Other government bodies are also owed money in the wake of the company’s collapse, including the Australian Securities and Investments Commission (ASIC), the State Revenue Office and the Fair Entitlements Guarantee scheme.
They are all owed unknown amounts.
More Coverage
The 241 ex-staff owed superannuation have ranges of as little as $11 to as high as $4500.
It’s estimated that Legacy Hospitality Group has around $99,000 worth of assets.
alex.turner-cohen@news.com.au
Read related topics:MelbournencG1vNJzZmivp6x7r7HWrGWcp51jrrZ7xaKlmqaTmny4u9GkZpqsXay8s7eOrKuanpZiuaay02adrqWZo7RustGopGabn6G5orzSnmSonl2XwrS1zZ6qrGWZo3quscubpq6qnpp6qbvSqaCtmZyewbp5wqGYoqZdrLWquMRmpq2glad6pLvMqZinoZWoerC8xKuYrZ1dlsBuus6rpJqkX6OyuL%2BMrKuoqqlkg3iBk25unW1haYFzgMCbcG2ZYGeudIXEcpxuaJOYhHQ%3D