Burger joint keeps trading despite debts, liquidation
A WELL-KNOWN burger joint, linked to organisers of a failed music festival, avoided $700,000 in debts when it liquidated but was able to continue trading, company documents reveal.
Milky Lane Surfers Paradise remained in operation, even though creditors never recovered their money, after the business was sold to a second company with the same director.
Both companies linked to the burger outlet have been directed and/or owned by organisers of music festival The Grass is Greener, which went into administration in December.
Milky Lane was lauded as a game changer on the Coast’s restaurant scene when it launched in 2018, favoured for its stacked burgers, 90s hip-hop vibe and decadent desserts and cocktails.
But behind the scenes, the financials were less juicy, with a liquidator finding the company had been insolvent from at least June 2020.
Records filed with corporate regulator ASIC show Milky Lane operated from 2018 through a company directed and owned by festival co-founder Jonathan “Johnny” Eddings, along with Karen Fines-frost, the mother of festival co-founder Oliver Fines-frost.
A second company, which is also directed and partowned by Mr Eddings, bought the Milky Lane business for $16,068 in May 2021.
The original company went into liquidation in December 2021 owing more than $660,000 in unpaid tax, considered unrecoverable.
Mr Fines-frost, also known as Oli Frost, is also a shareholder of the new company, which continues to trade the Milky Lane Surfers Paradise business.
In a report to creditors, liquidator Leon Lee said the first company, named Investment Holdings Australia 88, had been insolvent for a year before it sold the Milky Lane business.
“I am reviewing the sale to ensure it was commercial,” Mr Lee’s report said.
The liquidator said he had not determined whether the $16,068 paid for the business was adequate and that he’d identified possible unfair preference payments, insolvent trading and uncommercial transactions.
The Bulletin has contacted Mr Fines-frost, Mr Eddings and Mr Lee, of Morton & Lee, for further comment.
The company behind The Grass is Greener festival, Hand Picked Events and Marketing, went into administration on December 8.
Shattered suppliers have been told they’ll get as little as three cents for every dollar owed, despite festival money being used to prop up struggling Gold Coast restaurants owned by the organisers.
Administrators of The Grass is Greener found it had loaned $79,665 to the failed Milky Lane company, and another $136,752 to the new company, which continues to trade the Cavill Ave eatery.
According to administrators, Milky Lane traded at a loss for the entire 2022 financial year and both companies linked to the burger joint had required the loans to “facilitate trading”.
The loans are considered unrecoverable and creditors of the failed festival company have been told to expect between three to eight cents for every dollar they’re owed.
Mr Lee’s report said the failed Milky Lane company had long-term negative cash flow and economic conditions caused by the pandemic had contributed to its failure.
As there was no prospect of any dividend from the liquidation, he recommended creditors write off their debts.
The liquidation was referred to Mr Lee’s office by pre-insolvency advisers de Jonge Read.