Greek tragedy leaves bitter taste

The Weekend Australian - - FRONT PAGE - CHRIS­TINE LACY

In the end, it came down to this. Af­ter years of sup­port, Ge­orge Calom­baris’s lenders de­cided it was up to the jolly fat guy in the big red suit to save the celebrity chef’s trou­bled, multi-mil­lion­dol­lar hos­pi­tal­ity em­pire.

At the start of De­cem­ber, with the 41-year-old chef’s Made Es­tab­lish­ment group tee­ter­ing on the brink of col­lapse, the Com­mon­wealth Bank was giv­ing Calom­baris one last chance to turn things around.

On De­cem­ber 3, Aus­tralia’s big­gest bank slapped a series of caveats on prop­er­ties from which the for­mer MasterChef judge ran his Melbourne es­tab­lish­ments.

The bank, owed as much as $10m by Made, which was also owned by Swisse vi­ta­mins mil­lion­aire Radek Sali, was mov­ing to pro­tect its in­ter­ests should Calom­baris’s high-pro­file en­ter­prise go bust.

Via a series of “mort­gage of lease” le­gal in­stru­ments, the bank put its foot on Calom­baris’s op­er­a­tions. If the im­pend­ing Christ­mas trad­ing pe­riod was bad, the bank would be en­ti­tled to take con­trol and ei­ther sell the myr­iad eater­ies or re­alise as­sets to re­coup the mil­lions owed.

But Santa didn’t stop at Calom­baris’s restau­rants. Hopes for a fes­tive boom were dashed. Rev­ellers didn’t turn up. At least, not in the re­quired num­bers. Christ­mas was a bust.

CBA’s pru­dence proved prophetic last Mon­day when Calom­baris’s 22-com­pany en­ter­prise was placed into vol­un­tary ad­min­is­tra­tion and the doors of his 12 restau­rants and food venues were bolted shut.

More than 400 staff were out of a job, the Greek-her­itage chef’s

culi­nary dream was dead and Made Es­tab­lish­ment was placed into the hands of cor­po­rate un­der­taker Kor­daMen­tha.

In an emo­tion­ally charged state­ment late on Fri­day, Sali re­vealed the toll the cor­po­rate fail­ure had taken on the business part­ners.

“The past few weeks have been some of the sad­dest and most chal­leng­ing we have ex­pe­ri­enced in our time do­ing business,” the 43-year-old en­trepreneur said. “This has been deeply felt. “Sadly, my good friend and col­league Ge­orge has car­ried a huge amount of the bur­den.”

Bank in­ter­ven­tion

The CBA had been work­ing closely with Made, which is also 46 per cent con­trolled by Sali’s Light War­rior Group, since mid-2018 to­wards en­sur­ing the fi­nan­cial vi­a­bil­ity of the op­er­a­tions.

Sali, who made hun­dreds of mil­lions of dol­lars when he sold his stake in Swisse to the Chi­nese, had bought into the Calom­baris dream in 2016.

He fur­ther in­creased his stake in the group a year af­ter that, later ad­mit­ting his in­vest­ment came with no due dili­gence.

The bank’s more hands-on ap­proach to its client fol­lowed a series of dev­as­tat­ing blows to Calom­baris’s bur­geon­ing em­pire.

Af­ter Sali’s en­try to the business and the ap­point­ment of a new chief ex­ec­u­tive to run things, it emerged in early 2017 that Made owed a stag­ger­ing $2.6m in un­der­paid wages.

Trou­ble at the soc­cer

Shortly af­ter the un­der­pay­ments be­came pub­lic, Calom­baris was charged with com­mon as­sault fol­low­ing an al­ter­ca­tion at the ALeague soc­cer grand fi­nal.

Af­ter a hu­mil­i­at­ing ap­pear­ance at Syd­ney’s Down­ing Cen­tre Lo­cal Court in late 2017, the TV per­son­al­ity was fined $1000.

The soc­cer in­ci­dent had been an ugly look and people didn’t like what they saw.

By the fol­low­ing year, Calom­baris was sour­ing as Melbourne din­ers’ favourite chef.

With CBA keep­ing a close eye on its money, Calom­baris in May 2018 re­signed as a di­rec­tor of the myr­iad pri­vate com­pa­nies that com­prised his food em­pire.

And then fur­ther in­ves­ti­ga­tion re­vealed the un­der­pay­ment scan­dal was far worse than first re­vealed. By last July, Fair Work re­vealed that its in­ves­ti­ga­tors had dis­cov­ered the Made group had un­der­paid a much larger $7.8m in wages and su­per­an­nu­a­tion, which Calom­baris and Sali were forced to re­pay.

The business also made a $200,000 “con­tri­tion pay­ment” into Scott Mor­ri­son’s con­sol­i­dated rev­enue un­der a courten­force­able un­der­tak­ing.

Din­ers desert

Fol­low­ing these rev­e­la­tions, pa­tron­age at the group’s restau­rants — in­clud­ing its chain of Jimmy Grants out­lets — fell off a cliff.

“The re­al­ity is, the hit each of the busi­nesses took fol­low­ing Fair Work’s hand­ing down of the en­force­able un­der­tak­ing … was ir­repara­ble,” Sali said on Fri­day.

Ac­cord­ing to in­ter­nal doc­u­ments, less than five weeks af­ter the wage scan­dal was re­vealed Sali called in the fi­nan­cial ex­perts from Kor­daMen­tha to in­ves­ti­gate Made’s in­creas­ingly pre­car­i­ous fi­nan­cial sit­u­a­tion, in­clud­ing its sol­vency.

Sali’s Light War­rior paid the ac­coun­tants $35,000 to also report on “the con­se­quences of in­sol­vency” as part of its wider three-month stint in­side the col­laps­ing tent.

All the while, Sali was tip­ping money into the group to keep it afloat, which he con­tin­ued to do right up to the start of last week.

CBA, as first-rank­ing se­cured cred­i­tor, was work­ing with Calom­baris and Sali on a re­brand­ing strat­egy de­signed to pub­licly dis­tance the dis­graced TV chef from his business in the wake of the wage scan­dal, which caused pa­tron­age at the restau­rants to drop 50 per cent.

Hel­lenic Ho­tel in Wil­liamstown be­came Ho­tel Ar­gentina, his Hel­lenic Repub­lic in Brunswick was re­born as the Crofter Dining Room, Calom­baris’s flag­ship The Press Club mor­phed into Elek­tra — and in the dy­ing days, Hel­lenic Repub­lic in Kew trans­formed into a Sar­dinian restau­rant called Vita.

The last ser­vice of The Press Club was fea­tured in the mostre­cent sea­son of Net­work Ten’s MasterChef just be­fore Calom­baris was axed from the show.

CBA, while pro­tect­ing its in­ter­ests via the caveats, had also agreed to take no ac­tion pend­ing the Christ­mas trad­ing pe­riod to see if man­age­ment was able to trade its way out of the de­te­ri­o­rat­ing fi­nan­cial sit­u­a­tion.

It had also agreed to ex­tend the terms and con­di­tions of Made’s lend­ing fa­cil­ity to ease im­me­di­ate fi­nan­cial pres­sure.

But the last hope for sur­vival — rev­enue-driv­ing party book­ings that Christ­mas brings for most leading restau­rants — didn’t ma­te­ri­alise for Made.

Melbourne din­ers had moved on to eat else­where.

As­sets sell-off

Calom­baris and his mar­ket­ing con­sul­tant wife Natalie Tri­ci­caro be­gan liq­ui­dat­ing their own per­sonal as­sets early last month.

Their com­pany, Tri­cal Beach Pty Ltd, put a Morn­ing­ton Penin­sula week­ender at Safety Beach on the mar­ket.

Soon af­ter, Vic­to­ria’s Com­mis­sioner of State Rev­enue lodged a claim over the prop­erty for what’s be­lieved to be up to $14,000 in un­paid land tax.

The home, which was mort­gaged to ANZ, has now sold but is yet to set­tle.

As Jan­uary ticked by, things started to go from bad to worse.

Sali’s business part­ner in Light War­rior — for­mer Gold­man Sachs in­vest­ment banker Adam Gre­gory — pulled the plug as a di­rec­tor of all 22 Made ve­hi­cles on Jan­uary 20, leav­ing just Sali on the board.

Gre­gory then called Kor­daMen­tha’s Craig Shep­ard back into the group to at­tend a Jan­uary 29 board meet­ing, where Sali asked the ac­coun­tant “to clar­ify and ex­plain for the group and its di­rec­tor the var­i­ous op­tions avail­able … and the na­ture and con­se­quences of in­sol­vency”.

On February 4, CBA (with Shep­ard ob­serv­ing) met man­age­ment to dis­cuss the hos­pi­tal­ity group’s half-year trad­ing re­sults. An­other meet­ing was held with the bank the next day, fol­lowed by in­creas­ingly urgent con­fer­ence calls to work out a way for­ward for the dis­tressed group.

All the while, Calom­baris was ac­tive on In­sta­gram, pro­mot­ing his restau­rants and tak­ing his al­most 500,000 fol­low­ers on his food jour­ney.

But by lunchtime on Mon­day, all that was left to un­fold was the for­mal board meet­ing of direc­tors (that is, Sali) at which Kor­daMen­tha was of­fi­cially ap­pointed as the group’s vol­un­tary ad­min­is­tra­tor.

Light War­rior has ad­vanced the ac­coun­tants $160,000 as an up­front pay­ment for its work.

The apolo­gies

Sali pub­licly apol­o­gised on Fri­day for the fail­ure to turn the business around.

“I am re­ally sorry that we were not suc­cess­ful,” he said.

At about the same time as Kor­daMen­tha’s ap­point­ment, an “ex­pres­sions of in­ter­est” sale board was ham­mered out­side Calom­baris’s $5m Toorak man­sion, which is also mort­gaged to ANZ.

Calom­baris posted on so­cial me­dia that it was with “deep sad­ness and re­gret” that he con­firmed the demise of the en­ter­prise he’d built over 13 years.

“The past few months have been the most chal­leng­ing I have ever faced,” he said.

The chef has not been seen pub­licly since the dev­as­tat­ing news of the past week.

The blinds to his grey Ge­or­gian faux city chateau are drawn and its shut­ters firmly closed.

There was also no sign of him or his young fam­ily at its ex­pan­sive Arthurs Seat abode, bought via its Tri­cal Beach ve­hi­cle in 2018 for $2.2m. That home is mort­gage­free.

When The Aus­tralian ven­tured there on Wednesday, it was met at the front door by a hos­tile tradie, fol­lowed by an­other uniden­ti­fied man. Shortly af­ter, the front gate to the penin­sula home was chained and pad­locked.

Mean­time, Shep­ard and his col­league Leanne Chesser have this week be­gun a fire sale of Made’s as­sets.

Last-minute cred­i­tors

A week be­fore the ul­ti­mate col­lapse, Sali reg­is­tered two en­ti­ties as­so­ci­ated with his Light War­rior as se­cured cred­i­tors of the failed group, al­though this sta­tus is ques­tion­able be­cause any claim lodged less than six months be­fore a cor­po­rate col­lapse is not en­force­able.

Cu­ri­ously, on Fri­day the mil­lion­aire ap­peared to have changed his tune.

“It is our ex­pec­ta­tion that we will re­ceive zero cents in the dollar from the ad­min­is­tra­tion process,” his state­ment said.

Sali, like the bank, is ex­pected to have burned mil­lions of dol­lars on the Calom­baris dream.

Next Thurs­day, Made cred­i­tors will meet for the first time in Kor­daMen­tha’s Rialto Tower of­fice, with the Aus­tralian Tax­a­tion Of­fice also be­lieved to be owed a sub­stan­tial sum.

The bank, for its part, is tak­ing a prag­matic ap­proach and has said it has no in­ten­tion of ap­point­ing a re­ceiver to the group, adding it’s ea­ger to see staff and smaller sup­pli­ers who are owed money re­ceive some re­turn in the dollar.

But Calom­baris’s brand is now pro­foundly dam­aged.

You’re hot then you’re cold, you’re yes then you’re no, you’re in then you’re out, you’re up then you’re down.

‘The re­al­ity is that the hit each of the busi­nesses took ... was ir­repara­ble’ REDEK SALI MIL­LION­AIRE IN­VESTOR

AAP

Ge­orge Calom­baris

Ge­orge Calom­baris dur­ing a heated ex­change at the soc­cer

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