An administrator’s report gives a glimpse into the chaos of Damian Griffith’s hospitality empire

CREDITORS have voted to tip Damian Griffiths’ Bubbles Bar and Bistro company into liquidation, with Deloitte appointed to handle the wind-up.

Damian Griffiths in his Fortitude Valley venue Les Bubbles.

CREDITORS have voted to tip Damian Griffiths’ Bubbles Bar and Bistro company into liquidation, with Deloitte appointed to handle the wind-up.

The development comes as a scathing administrator’s report gives a glimpse in to the chaos and dysfunction at the heart of Griffiths’ crumbling hospitality empire in Brisbane.

Creditors today accepted a recommendation to liquidate his Bubbles Bar and Bistro company, which collapsed owing $1.32 million in December. It had just $5.62 in the bank.

Deloitte beancounters Richard Hughes and David Orr allege the company “may have been insolvent from as early as December 2015’’.

They also claim to have uncovered a raft of “possible offences/voidable transactions’’ including “unfair preference payments’’ and “unreasonable director-related’’ deals.

After the ATO launched legal action to wind up Bubbles in mid-November, Griffiths sold the still-trading business for just $52,383 to a company controlled by his top lieutenant, Dan Strachotta.

But Hughes and Orr found that deal undervalued the Bubbles business by at least $170,466, making it an uncommercial transaction that could prompt a liquidator to take legal action to recover the balance.

They allege that Griffiths “may have acted dishonestly and/or fraudulently’’ by offloading it so cheaply.

Their report shows the business generated $10 million since it launched three years ago but net income amounted to only $4.7 million, with related party transfers making up the majority of the cash movement.

Related party debts topped $2 million, with “numerous intercompany loans’’ coming from Griffiths’ other venues, including Doughnut Time, Mister Fitz’s Finest Ice Cream, Chester Street Bakery, Limes Hotel and the Alfred & Constance bar.

“Company funds were being used to fund the operations of related entities, and vice versa… The company’s cash flow issues were as a result of funnelling cash from this business into other group businesses to pay certain bills when required,’’ the report says.

BLAME GAME

Receivers took over Alfred & Constance in December.

GRIFFITHS blamed Bubbles’ demise on “escalating debts, legal action by the ATO and a competitive market’’.

But Hughes and Orr said other factors also contributed, including “undercapitalisation, inaccurate recording of company expenses, excessive head office costs and poor management of the business’’.

The outlook for unsecured creditors is grim.

The best case scenario would see them claw back just 13¢ in the dollar but that’s dependent on the administrators recovering money from legal actions and related party deals.

Meanwhile, Griffiths faces personal bankruptcy after losing a legal battle with relatives chasing the $557,704 balance owing from a 2014 loan.

NAB-appointed receivers who seized control of his Limes Hotel and Alfred & Constance bar in December are poised to reopen the venues any day now as they get ready to sell them.

Griffith did not respond to requests for comment yesterday.

CASH STARVED

SPEAKING of desperate days, LWP Technologies is fast running out of cash after several disastrous investments and a lost legal battle.

The Brisbane-based fracking player suffered a near $10 million net loss last financial year and revealed yesterday that it had just $182,000 in the bank as of December 31.

New chairman Dan Lanskey said two legal reviews of the company found “apparent departures from generally accepted process (sic) and procedures.’’ That, of course, is a sanitised way of saying things are pretty screwed up.

Lanskey has flagged plans to restructure LWP and raise capital this year as auditors continue to warn the company remains on a knife’s edge.

DETOXING

Consolidated Properties’ Don O’Rorke.

BRISBANE developer Don O’Rorke starts the year relaxed and refreshed after spending last week depriving himself of life’s essential vices.

Yes, the Consolidated Properties boss detoxed at the pricey Golden Door health retreat in the Hunter Valley.

No alcohol, caffeine, sugar or mobile phones are allowed as guests indulge in exercise, meditation and yoga. Somehow he survived!