Creditors owed millions from Lobster Cave collapse warned they are unlikely to receive a cent
Creditors of Melbourne’s famed Lobster Cave restaurant have been warned they are unlikely to receive a cent, as it’s revealed the venue went bust with $1.3m in unredeemed vouchers.
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Creditors facing hefty losses from the collapse of the Lobster Cave have been warned they are likely to get nothing back as efforts to find a rescue buyer fall flat.
It can also be revealed the famed Melbourne restaurant went bust with more than $1.3m in unredeemed dining vouchers owed to customers.
The updates come as the administrator of the Beaumaris venue, which went under owing $4.2m to creditors including $500,000 to employees, tries to lock in a buyer ahead of a vote on Tuesday by creditors on whether to liquidate the company.
Vasilios Fergadiotis, better known as Bill Ferg, who has run the Lobster Cave for close to four decades, has suffered significant financial woes in recent times after several of his businesses collapsed.
Lobster Cave administrator Stephen Dixon, of Hamilton Murphy Advisory, said it was likely unsecured creditors – who are owed more than $2.8m – would receive no return at all if the company was tipped into liquidation.
But options to save the restaurant appear scarce with Mr Ferg yet to pitch a rescue deal which would extinguish his debts and give him back control of his company.
A sales campaign for the business run by the administrator has also only generated one expression of interest and no firm offer.
Mr Dixon is looking to gain more time from creditors to try and bed down a sale but has warned them liquidation is likely to result if the potential buyer can’t be locked in.
“On the basis that a (deal to creditors) has not been received from the director and ending the administration is not a viable option due to the current financial position of the company, the only option I am able to recommend to creditors is the liquidation of the company,” Mr Dixon said.
“However, I will be seeking an adjournment at the second meeting in order to preserve my powers as administrator whilst I progress the sale campaign currently underway for the realisation of the company’s business and assets.”
He said he anticipated a sale process would take three weeks to complete and wanted to allow the interested party “additional time to assess the opportunity”.
The proposed sale would include the company’s plant and equipment, fit out, stock on hand and intellectual property including the business name.
The lavish seafood restaurant, which is located in Melbourne’s southeast and employs 39 workers, has continued to trade since entering administration in May.
A total of $508,731 is owed to workers, including in superannuation ($118,042) and annual leave ($131,335), a new report lodged with the corporate regulator reveals.
Mr Dixon said the Australian Tax Office had lodged a claim of $1.6m, which was at odds with the $183,929 Mr Ferg disclosed in statutory debts.
He said the company’s chief financial officer also disclosed the total value of outstanding unredeemed vouchers was $1,379,008 at the time of his appointment.
More than $3.1m is owed to the company, mostly from interrelated party loans, including $1.9m from Mr Ferg “in lieu of wages”.
“The director has advised me that he is not in the position to repay the outstanding amount as he is currently undergoing personal insolvency proceedings,” Mr Dixon said.
“He also noted that the payments that were made to him were in lieu of wages.”
Mr Dixon said his preliminary findings indicated the company may have traded while insolvent since “at least” June 2022, if not earlier.
He said this was based on indicators of insolvency including a working capital ratio of less than one – meaning the business didn’t have enough short-term assets to cover its short-term liabilities – and overdue taxation liabilities
But Mr Dixon said an insolvent trading claim may be “uncommercial” to pursue given extensive legal costs, and that Mr Ferg does not have any properties in his name and is engaged in his own personal bankruptcy proceedings.
Mr Ferg was recently hit with a near $1m bankruptcy claim linked to the takeover of a former business, as previously revealed by the Herald Sun.
Creditors owed more than $7m voted to accept an eleventh-hour offer put forward by the hospitality veteran earlier this year.
Mr Dixon said Mr Ferg attributed the venue’s collapse to a substantial increase in the cost of goods, wages and utility expenses, as well as broader economic conditions which has resulted in a lack of consumer spending.
“The company has had limited capacity to offset these increases through corresponding price adjustments due to prevailing market resistance, thereby constraining revenue and profitability,” Mr Dixon said.
But the administrator also said working capital deficiency – when a company’s current liabilities exceed its current assets – poor strategic management and unrecoverable related party loans were to blame for the business’s demise.
Mr Ferg told News Corp that the administrator for the Lobster Cave was carrying out the usual process, which included considering any claims.
“Lobster Cave is continuing to trade, and as always is continuing to serve premium cuisine, especially seafood, as a celebration and occasion restaurant,” he said.
“We are grateful for the ongoing support of the community, our loyal customers, and our dedicated staff.
“The magical experience of dining at Lobster Cave has never changed and the lobsters are fantastic as ever.”
The Lobster Cave, which has been trading since 1987, previously avoided having a liquidator appointed to it in November last year after non-bank lender and buy-now, pay-later service provider Humm Group launched legal action against the business.
The restaurant made headlines in 2017 when then Opposition Leader Matthew Guy was spotted having dinner with an alleged Melbourne mafia boss in an incident dubbed “lobster with the mobster”.
An elderly driver also accidentally ploughed through the Beaumaris restaurant in May last year, leaving customers diving for cover.
Analysis of liquidation reports reveals several of Mr Ferg’s other companies, Extramile Trading, Green Earth Industries and Marsh Dairy, all collapsed last year with a combined near $17m in debt.
Mr Ferg was contacted for comment.
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