Bethany’s debt sitting over $700,000
High overheads, over-staffing and a lack of working capital has landed a respected restaurant more than $700,000 in debt.
The owners have pointed to a previous accountant, who they say gave them bad advice.
Bethany’s, on The Square in Palmerston North, was placed into liquidation in July by its owners Reuben and Lynne Leung Wai, who ran the restaurant for eight years.
Located in the Palmerston North City Council’s building in the centre of the city, Bethany’s was named after the Leung Wais’ daughter, who died after an eightmonth battle with bone cancer.
According to the first liquidation report from Imran Kamal of Liquidation Management, Bethany’s had ‘‘high overheads, was under-capitalised, overstaffed’’ and had ‘‘a lack of working capital’’.
The restaurant’s two floors meant higher staff costs and cashflow was especially low during winter.
The company’s directors, the Leung Wais, said they had received ‘‘substandard advice’’ from a previous accountant, Kamal said in his report.
Debts began to mount, the restaurant fell behind on its tax obligations and a new accountant was unable to negotiate a payment plan with Inland Revenue.
‘‘Based on the financials, the company has been insolvent for several years,’’ Kamal said.
Financial figures attached to the liquidation report show Bethany’s owes $777,364.
Among those owed money are Inland Revenue, $431,920, and the ANZ Bank, $288,720.
The city council is owed $20,899 in rent, although Kamal has arranged to pay all future rent while the business trades.
He said it made sense to continue to trade through the liquidation.
‘‘The business has great potential, is in a great location and has a good customer base,’’ Kamal said.
Almost all of the restaurant’s staff had been retained on a casual basis, with Reuben Leung Wai working there as head chef.
Suppliers had also allowed the restaurant to purchase goods in the meantime, Kamal said.