Companies behind Cali Beach, SinCity, Tempo, Surfers Pavilion, Havana to pay $475k of $2.2m tax bill
Companies behind four of the Gold Coast’s best known bars and nightclubs will only pay a fraction of a $2.2m tax debt, after threatening liquidation if the ATO rejected their plan.
Business
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Companies behind four of the Gold Coast’s best known bars and nightclubs will only have to pay $475,000 of a $2.2m tax debt, after threatening liquidation if the ATO rejected the plan.
Artesian Group called in a restructuring practitioner to deal with the seven-figure debt in December, after a director signed a document confirming companies behind Cali Beach, Havana RnB, SinCity/TEMPO and Surfers Pavilion “were either insolvent or likely to become insolvent”.
Documents lodged with ASIC on Monday confirmed the tax office had accepted the proposal, which will see its companies pay $475,487 – less than a quarter of what they owed – in instalments over 12 months.
A report from administrator Nikhil Khatri of Worrells said the alternative to the proposal was liquidation of the four companies, which he said would leave the ATO at risk of receiving even less.
According to the report, rooftop Insta-hotspot Cali Beach owed $911,024; Surfers Pavilion owed $822,915; Havana owed $231,810 and Tempo/Sincity owed $152,018.
Artesian also operates White Rhino bar-restaurant in Surfers Paradise and Brisbane hotspots Tama, The Gatsby and ironically-named Tax Office - none are part of the restructuring plan.
Artesian Group managing partner Matthew Keegan said the restructuring plan had been accepted by the ATO.
“We’re extremely pleased with the result,” he said. “With COVID now well in the rear-view mirror, the Gold Coast economy booming and all the businesses trading strongly we’re looking forward to a bumper 2024.”
The companies under restructure are solely directed by Artesian Group general manager Tim Martin.
In letters to the restructuring practitioner, Mr Martin said the businesses had struggled through Covid shutdowns, with staff layoffs creating “operational complexities” which left them unable to meet tax obligations.
Mr Martin’s letters said the tax debt became apparent in 2021-22, and the businesses unsuccessfully attempted to establish payment plans with the ATO.
The challenges compounded in late 2022, when the companies’ revenue fell short of forecasts and costs increased.
Mr Martin told the administrator the companies’ prospects had improved since, despite the figures still being down 10-15 per cent on the previous year for October-November 2023.
The letter said the clubs were “poised to continue as profitable”, and able to meet staff entitlements and other obligations.
The clubs made non-essential staff including hosts and head office workers redundant last year, Mr Martin wrote, reducing their base management costs.
According to Mr Martin, the base monthly management costs are $93,000 for Cali Beach; $56,000 for Surfers Pavilion; $12,000 for Havana; and $9000 for Tempo, previously trading as SinCity.
“As a consequence of the above, the business envisions a profitable future path if it can successfully address the outstanding debts currently impeding its progress,” his letter said.
Mr Khatri’s report said he considered the companies would be “reasonably able to meet their obligations throughout the plan” if it was approved.
If it wasn’t, and the director chose to liquidate, the report said there would only be a pool of $274,677 to share between creditors – including the tax debt as well as any other debts that arose in the meantime.
Due to complex relationships between the Artesian companies, liquidations were likely to be lengthy and costly, the report said.
Artesian is ultimately held by multiple investors including Matt Keegan; Culture Kings founders Simon and Tah-nee Beard; Nick Dye, son of Melbourne Cup-winning jockey Shane Dye; longtime Orchid Avenue restaurant Costa D’Oro co-owner Michael Fusco; retired jockey Leonard Dittman and jockey son Luke; Mecca Bah owner Mark Geraghty and Kim Bracher; Natasha and Isabella Pappas; Mr Martin and wife Tracey; and pool pro Johl Younger.
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