Beachside Gold Coast cafe-bar’s liquidation
A POPULAR beachfront cafe is in liquidation after a stoush between two real estate agents wound up in court.
In a judgment handed down in the Supreme Court on Friday, the company behind Sandbar Cafe, on the Esplanade at Surfers Paradise, was placed into provisional liquidation amid questions over its solvency, as a lender circles over a high-interest loan. The company also has a tax debt of more than $370,000.
Ipswich realtor Ajay Bakshi applied in September to put the company – named 52 The Esplanade and directed by high-profile commercial agent Greg Bell – into liquidation.
ASIC lists Mr Bell as sole director of 52 The Esplanade. Another company directed by Mr Bell is a 50 per cent shareholder.
A company directed by Mr Bakshi is listed as the other 50 per cent shareholder.
Court documents show the company bought the cafe for $520,000 in June 2020.
Documents lodged with the court show Mr Bell and his company 4 Orchid Ave, as well as Mr Bakshi and his company 100 Brisbane Street, were guarantors for a $632,000 loan taken out with Goldsmith Farrington Capital to purchase the cafe bar.
The loan was secured against three properties registered to Mr Bakshi or his company, including his Ipswich home, as well as the cafe business and its assets.
The loan was due to be paid in full by November 20 this year, but was in default from October, earning more than $30,000 a month in interest with a balance rising to $723,000 by November 12.
In his affidavit to the court, Mr 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.
According to the Judgement, the Esplanade company, directed by Mr Bell, resisted the application for a liquidator, claiming Mr Bakshi’s company “lacks standing” to make the application.
In its defence, the Esplanade company said that Mr Bakshi’s Brisbane Street company had “never been a shareholder”, despite it being registered as such with ASIC, claiming Mr Bakshi merely held them in trust for Mr Bell’s business partner Kevin Carey.
The Esplanade company denied it was trading insolvent and said appointing a liquidator would be “futile”, according to the judgment.
The court documents said Mr Bell appointed Mr Carey – with whom he had previously operated Gilley’s Bar at the Orchid Ave-Cavill Mall corner – as operations manager for the cafe.
The affidavit said Mr Bakshi was the sales agent for the cafe and that Mr Bell and Mr Carey had planned to buy it, securing finance for the purchase against property they owned.
Mr Bell’s affidavit said he and Mr Carey wanted to help Mr Bakshi who “had defaulted on his personal mortgage affairs”.
It said Mr Carey agreed to help Mr Bakshi retain his properties in exchange for them being used as temporary security against the Sandbar loan.
As a result, Mr Carey transferred a vacant block of land worth $150,000 to Mr Bakshi and loaned him money to meet mortgage repayments.
Mr Bell’s affidavit said Mr Bakshi was listed as a shareholder in the Esplanade company only because the lender required it.
It said Mr Carey had transferred his 50 per cent interest in the Esplanade company to Mr Bakshi, who had never paid for the shares.
An affidavit lodged by Mr Carey said he’d initially intended to use the land as security for the Sandbar, and its transfer “disrupted” the finance.
He said Mr Bakshi agreed it could be used as security and returned to Mr Carey once he and Mr Bell refinanced the loan.
Judge J Kelly found that, as registered shareholder and guarantor for the Sandbar loan, and a potential creditor of the Esplanade company, Mr Bakshi’s company did have sufficient standing to apply for the liquidation.
The judge was critical of the defence, saying “the affidavits of Mr Bell and Mr Carey did little more than contain bare denials and mere assertions”.
The judge said the evidence showed the Esplanade company had defaulted on interest and full payment of the loan and that it owed $370,253 to the tax office.
Judge Kelly ordered Terry Rose be appointed provisional liquidator of 52 The Esplanade, and within 14 days provide the court details of its solvency, assets, liabilities and other relevant information.