NightQuarter debts claimed by creditors, staff revealed in SV Partners’ report

Latest documents have revealed the scale of debts claimed by creditors and staff after the collapse of the company behind award-winning live music venue NightQuarter.

The NightQuarter on the Sunshine Coast closed on November 28. Picture: Letea Cavander

Latest documents have revealed the scale of debts estimated to have been left behind by the collapse of an award-winning Sunshine Coast live music venue.

Australian Securities and Investments Commission documents show Food Focus Australia Pty Ltd – the company behind the recently closed NightQuarter in Birtinya – could owe up to $4.2m to secured creditors, almost $300,000 in unpaid super and leave entitlements to staff and up to $3.2m to unsecured creditors.

To-date administrators had been advised of about $1.6m worth of debt claimed to be owed to 21 secured creditors and about $2.02m worth of debts owed to 92 unsecured creditors, but those figures could change as investigations continue.

Among the secured creditors listed in the SV Partners report was more than $1m owed to Stockland – landlord of NightQuarter – and more than $250,000 worth of debt owed to the Queensland Rural and Industry Development Authority.

The report states that staff are owed $222,305 in superannuation payments and $71,234 in annual leave, with a total of 57 workers employed across NightQuarter and the Malt Shovel Taphouse venue.

The Australian Taxation Office is one of several unsecured creditors listed, claiming to be owed $638,397, while trade creditors have so far advised of more than $1.2m worth of debt.

The popular Birtinya live music venue NightQuarter suddenly shut its doors on November 28, with the directors Ian Van der Woude and Michelle Christoe citing setbacks due to Covid-19 restrictions and poor crowd numbers as reasons for the closure.

The pair had become directors of Sandgate Taphouse Pty Ltd in April and the newly renovated historic North Brisbane pub Sandgate Post Office Hotel was opened on November 11.

Ian Van der Woude and Michelle Christoe are the directors of NightQuarter. Picture Lachie Millard

Vendors at NightQuarter have said they were blindsided by the closure and lost their livelihoods just weeks ahead of Christmas, but Ms Christoe has denied vendors had been kept in the dark about the closure.

The report said Malt Shovel Taphouse had continued to have traded in the weeks since entering administration, turning almost $80,000 profit in the first three weeks of operation.

The document also stated there was about $100,000 worth of money owed to the company in pre-appointment debt, related to NightQuarter vendor licence fees, functions and Malt Shovel Taphouse functions.

Almost $200,000 worth of related party loans to the company were also recorded, while the directors had advised of an offset against those loans for payments totalling more than $366,000 stemming from the proceeds of sale of the directors’ former home.

The report from SV Partners highlights one $228,000 transaction from the company’s directors that was identified as possibly being uncommercial or unreasonable that “may be considered recoverable by a liquidator”.

“This relates to a private loan settlement for another entity where the funds were briefly held on constructive trust for that entity and subsequently disbursed,” Ms Christoe said.

“We disagree with the suggestion that the funds would otherwise be recoverable by a liquidator.”

The report states that SV Partners’ preliminary investigations had identified 26 payments, totalling approximately $520,000, that may be considered as unfair preference payments that could also be recoverable.

Company director Michelle Christoe said they were continuing to work with administrators to achieve the best outcome possible for all creditors and that they were working on developing a draft Deed of Company Arrangement (DOCA) that could provide a better outcome than liquidation.

Vendors said they were blindsided by the NightQuarter closure.

“This will be presented to creditors at a future meeting,” she said.

She said they had been victims of a changing market post-Covid and they were working with researchers on study groups with the goal of developing a white paper with further understanding of the shifting marketplace to share among the industry.

The situation was expected to be reviewed at a creditors meeting on January 5, but in their report SV Partners recommended an adjournment citing various contingencies that could be put into place to avoid liquidation.

“Should the meeting not be adjourned, then placing the company into liquidation is the only viable option to creditors,” it stated.

Ms Christoe said the directors were also owed approximately $180,000 by the company, plus employee entitlements, and that they were working with a specialist marketing team on the sale of the NightQuarter and the Malt Shovel Taphouse, which the company also owns.

“However some asset sales will not achieve their book value and therefore a shortfall is likely,” she said.

She added that a special provision for staff superannuation was being considered in the draft DOCA.

A spokeswoman for Stockland said they acknowledged the challenging conditions experienced by the owners of NightQuarter given the ongoing impacts of the Covid-19 pandemic on the entertainment and hospitality industry.

“We have worked closely with the owners to support their business where possible,” she said.

“The site is currently under external administration, and we’re unable to comment further.”

The liquidators’ report states the administrators had been in contact with the landlord and were “in the process of commencing an expression of interest campaign to purchase the company’s assets/IP relevant to Night Quarter and/or enter into a new lease agreement for that premises with the landlord”.