Italian restaurant chain Criniti’s has been sold for just $1million – including GST – to a South Australian restaurant group as creditors still wait to receive $19million.
The Brunelli group has bought six remaining locations which include venues at Darling Harbour and Parramatta in Sydney and Southbank in Melbourne.
Reports from the company’s liquidators, Worrells, revealed a $6.1million deal had been virtually done but was suddenly off the table after the COVID-19 pandemic hit.
In what has been described as ‘beyond a fire sale,’ Brunelli owner Raj Patel’s bid of $1million including GST was the best offer.
The money was shared between 14 Criniti’s businesses including six stores and holding companies Crinz Media and Criniti Holdings.
Some of the companies went for as little as $25,000 in what hospitality broker and owner of Prosperality David Hobbs called ‘beyond a fire sale’, reports the Herald Sun.
‘If a restaurant was 400 seats the revenue could easily be four to five million a year with an operating profit of $400,000 – $500,000,’ Mr Hobbs said.
The collapsed restaurant chain owes more than $6.5million to its former employees and had $4.5million missing from its books, Worrells claimed.
Six Criniti’s eateries were closed when the business went into administration on November 19, with debts of more than $16.5million.
The chain’s other seven restaurants shut on April 3, due to the coronavirus pandemic, having earlier switched to takeaway to comply with government restrictions.
Staff did not receive their pay for long periods and investigators also uncovered unpaid superannuation, long service leave and annual leave the Daily Telegraph reported.
Worrells previously found the company had been trading while insolvent since December 1, 2018.
The $6.651million owed to employees will likely be paid out from the taxpayer-funded Fair Entitlements Guarantee scheme, but they will only receive it if they are eligible.
Investigators calculated $4.5million was missing after discovering there was a disparity between money taken through store tills and what was banked.
The missing cash disappeared between December 1, 2018 and November 18, 2019.
There were varying amounts missing from different stores.
At Woolloomooloo $21,000 was missing, whereas at Darling Harbour there was a whopping $935,000 shortfall.
Investigators listed the missing funds as ‘Unfair Director Related Benefits’.
‘We are investigating whether the Director and/or his family have received cash from the Company and other Companies in the group,’ investigators said.
The chain, founded in 2003, was managed by Frank Criniti and his wife Rima until they divorced in 2009 and he was left in charge.
Frank was disqualified from managing companies for five years in 2018 due to his involvement in seven other failed businesses.
The chain’s sudden collapse came as a shock to industry rivals, but people who had dined there said it ‘didn’t surprise them at all’.
Rima Criniti handed sole ownership of the pizza-pasta franchise to her now ex-husband Frank and his relatives in 2009.
Rima said the Criniti clan made several errors which included accumulated debts and rapid expansion.
‘While I left the business almost a decade ago, I have continued to dine at Criniti’s with my children, and have always loved the food and the experience,’ Rima wrote in a statement.
‘However, it takes more than fantastic food and hospitality to make a restaurant group a success.
‘It also requires smart management. There are very high costs involved in the hospitality industry, and if this is met with poor business decisions, then the business, its staff, and customers, will all suffer – as we now see with Criniti’s.’