Damian Griffiths lobs lowball offer to creditors to beat bankruptcy

The Failed Brisbane hospitality kingpin behind Doughnut Time has lobbed an absurdly lowball offer to his creditors, who are owed $30 million, as he attempts to emerge from the shadow of personal bankruptcy.

LOWBALL OFFER

Damian Griffiths has just lobbed an absurdly lowball offer to his creditors to emerge from the shadow of personal bankruptcy.

How low? Just a tiny fraction (.004) of 1 cent for every dollar owed.

Damian Griffiths started restructuring assets five months before declaring personal bankruptcy

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

The failed Brisbane hospitality entrepreneur, whose restaurant empire once included the Doughnut Time chain, has secured an anonymous third party to stump up a mere $129,500 if those owed money agree to annul his bankruptcy at a meeting next week.

That money would be carved up by creditors, who have sent proofs of debt totalling $29.7 million to trustee Raj Khatri, one of the insolvency bigwigs at Worrells.

Damian Griffiths. Photo: Steve Pohlner

The bulk of the money, $25.6 million, is owed to numerous liquidated companies, including $5.5 million to Doughnut Time, and others such as the tax man, who is chasing $2.4 million.

Other creditors hope to claw back $4 million, with unsecured parties such as tradies owed more than $878,000, according to Khatri’s just-released report obtained by City Beat.

Khatri has recommended that creditors, including those with personal guarantees, accept the unsolicited offer when they meet next Wednesday because the alternative is even worse.

“Should the bankruptcy continue, it appears highly likely that there would be no dividend to creditors,’’ he says.

Indeed, with no offer in place, Khatri estimates that a best-case scenario would see creditors claw back at most 1.27 cents for every dollar owed at some point in the next 10 years.

By contrast, the deal on the table could see tiny payouts within six months.

It’s got a high bar to clear, with a majority of creditors present and voting needed. They must also represent at least 75 per cent of the dollar value of the debts.

If the offer is knocked back, Griffiths will remain bankrupt until early 2021, although trustees have the power to extend the three-year term at their discretion.

HUGELY GALLING

Griffiths, who has now decamped to London, declared bankruptcy in March last year following the implosion of his entire business group, which included Les Bubbles bistro, Limes Hotel, Alfred & Constance bar, Chester Street Bakery and Mr Fitz’s Finest Ice Cream.

Soon after Khatri’s appointment as trustee, creditors found it galling in the extreme to learn that Griffiths owned two heavily-mortgaged apartments in Paris collectively worth up to $1.3 million.

Khatri has concluded that a $1 million third mortgage registered over both properties by Griffiths’ father just two months before his appointment appears to be a “voidable transaction’’.

The Fortitude Valley restaurant Les Bubbles was one of Griffiths’ business interests.

But it looks like the chance of unwinding that deal and going after the equity in the properties is highly unlikely.

Khatri says his demand for the mortgage to be released by BG Griffiths was knocked back last year and a small settlement offer was later withdrawn.

He determined that pursuing the matter through French courts could take up to 10 years and cost more than $157,000.

“Without funding from creditors, I am not able to take the necessary steps to void the mortgages held by BG Griffiths over the properties,’’ the report says.

“Accordingly, in the absence of funding, I am unable to pursue the potential equity in the property and … there will be no return to creditors.’’

Of course, if the payment to end the bankruptcy gets over the line, then any chance of squeezing something out of the unit sales also disappears.

Griffiths, who made a $786,000 profit from the sale of two units in New York before going bust, could not be reached for comment yesterday.

But he’s working again and currently liable to contribute $13,961 in to the bankruptcy coffers, Khatri says. He’ll owe another $28,000 if his bankruptcy remains intact.

Elsewhere in his report, Khatri revealed that 18 of Griffiths’ now-defunct companies had allegedly been trading while insolvent.