Tonka, Coda restaurants call in restructuring experts to wipe debt

Two of the city’s top restaurants have called in restructuring experts to help wipe an overhanging debt. Here’s what it means for their future.

Tonka and Coda have called in restructuring experts to navigate their financial future. Picture: Andrew Tauber.

Two of Melbourne’s premiere restaurants have called in restructure experts, as the owners seek to wipe a tax debts

Tonka and Coda, owned by hospitality veterans Mykal and Kate Bartholomew, approached Sydney-based Grant Thornton Australia last Friday to cut a deal on tax debts accumulated during Covid.

Mr Bartholomew said it was business as usual at his two city restaurants, which remain open, and staff and suppliers were continuing to be paid.

“We’re still open, nothing has changed,” he told the Herald Sun.

Restaurateur Mykal Bartholomew said it was business as usual at Coda and Tonka. Picture: Aaron Francis.

“The small business restructure allows us to put forward an ecosystem to sustain our staff and suppliers, with the ATO very kindly applying a reduction on tax debt… it’s actually a form of kindness.”

Mr Bartholomew said without a possible debt reduction, the business would be operating week to week.

“It would just be harder. We would love to buy new chairs or redo the floors, and have chefs with wish lists of things they want in the restaurant,” he said.

“Last winter was grim for us, and this contributed to a snowball effect. This year, we haven’t had a dip. It’s not the trade we were doing in winter 2019, but we haven’t dipped.”

Mr Bartholomew said remaining open during Covid, staying up to date with his supplier bills, and continuing to pay staff wages and superannuation during lockdown, placed his businesses in good stead for a possible concession.

Grant Thornton Financial Advisory partner Erica Xu said: “The entities (Bondi Beach Pty Ltd trading as Coda Bar & Restaurant, and Barolo Brothers Pty Ltd trading as Tonka Restaurant) are currently undergoing a small business restructure process which allows the director to maintain control of the businesses, and as such there are no disruptions to trading or for staff.”

“Based on our initial discussions with the entities, they believe there has been a lag effect from the Covid-19 pandemic combined with inflationary pressure on costs which has led to a decline in sales and escalated operational costs which has led to the decision to undertake a small business restructure to ensure the continuity of the business’s operations.”

Both businesses remain open. Picture: Jake Roden.

In 2021 the federal government introduced new debt restructuring process to support small businesses during the Covid-19 pandemic.

As part of the changes, small businesses with liabilities of less than $1 million were able to apply for a small business (SB) restructuring plan.

To be eligible, small businesses must have paid all outstanding employee entitlements, including superannuation, and ensure all tax lodgements are up to date or substantially complying.

Sydney restructuring experts Grant Thornton Australia are working with Bondi Beach Pty Ltd, the parent company of Tonka and Coda, to cut a deal with the ATO.

The ATO and Grant Thornton Australia have been contacted for comment.