CEO admits Nino’s restaurant group is bankrupt

The Nino’s restaurant group, which has about 20 franchises around SA, is facing bankruptcy, with its CEO admitting that there is no hope to repay debt of at least R13m.

Rashmikant Bhana, who has run the company for 19 years, has been provisionally sequestrated, with claims that his personal finances are inter- twined with those of the company and, according to one creditor, “they need to be unsorted”.

This week saw a flurry of applications against the Durbanbased group in the high court, with major shopping centres also taking legal action to recover alleged rental debt.

The group markets itself as a modern cafe chain focused on Mediterranean staples, breakfasts, sandwiches and gourmet coffee. Up until late 2018, Bhana was the sole owner of the group, coffee roasting specialists Fine House Coffee and the sole member of Aspigon 466 CC, which owns two Nino’s franchises in Durban’s Pavilion and Gateway shopping centres.

However, one of his creditors, Sheldon Lovemore, took a 50% stake in Nino’s after Bhana failed to repay a R7m loan. The amount of that loan is in dispute and Lovemore has now applied to the high court in Durban to have the company placed in business rescue.

“I don’t know the financial position. I have no say in the operations and financial administration. I know he [Bhana] owns 15 franchises and employs 15 to 20 staff at each.

“I am not immune to the decline in the economy, but with better management and proper strategy, it could be nursed back to health,” Lovemore says.

But Bhana wants the application dismissed. He says the business cannot be rescued and blames the economy and “exorbitant rents” charged by landlords in high-end shopping centres. “Nearly all the franchises are in the process of closing or being evicted. The royalties from the existing ones cannot support the monthly costs.”

The provisional sequestration order was granted against him by Judge Jacqui Henriques on Wednesday.

Local Hindu priest and businessman Vishwarnath Manawer sought the order, claiming Bhana owes him about R7m.

In his affidavit, Manawer says Bhana approached him in October 2017, saying he had financial

difficulties, asking for prayers and spiritual guidance.

“He said he had a cash flow problem. He had bought out his former partner for R32m and he was under pressure to pay the balance of R6m.”

Manawer said Bhana made a “glib proposal” that he lend him R3m and buy the Gateway and Pavilion stores from him as going concerns for R1.5m each. “He promised to pay me back in eight installments of R500,000 each. Which would have meant a profit of R1m for me. I visited the head office. It appeared well established and well run.”

Manawer says the sale of the franchises was never finalised and he ended up making further personal loans to “shore him [Bhana] up while he borrowed from Peter to pay Paul”.

Cheques were dishonoured and Manawar says he discovered that Bhana owed other people money, had used the Gateway store as security for a debt of R4m, and was not paying the company that owned all the equipment at the stores.

The Musgrave centre branch shut down when the landlord cancelled the lease. Office Xchange CC, which paid R2m for a new franchise at Cornubia mall, had launched court action to cancel the deal, claiming cash flow projections were “hopelessly exaggerated”.

“His personal financial affairs are in a shambles, as [is] the affairs of the Nino’s group. They are intertwined and need to be sorted out,” Manawar said.

Bhana, in his affidavit, denies all the allegations, although he admits Manawar lent him money. He says Manawar has no claim against him because Manawar is not registered as a lender and, anyway, it was “reckless lending”.

Bhana’s attorney Thegaraj Chetty said he had been instructed to apply for a rescission of the sequestration order.