Pub baron Fraser Short denies trading while insolvent
Fraser Short put his hospitality company The Sydney Collective into administration just before Christmas and this week has denied any liability for insolvent trading.
The collapse of the pub king’s hospitality empire came just a year after he sold most of his assets for $300 million to the Laundy Hotel Group, including the Watsons Bay Hotel in Sydney.
A total of five properties changed hands, before the $5.5m collapse of The Sydney Collective.
The Australian Taxation Office (ATO) claims it is owed about $1.1 million, however, the company disputes the claim.
ASIC Administrator Adam Farnsworth noted that Short denied the trading while insolvent claim and that the ATO debt was subject to a payment plan.
“I have identified seven payments to the ATO totalling $310,282 during the six month prior to my appointment,” Farnworth wrote in his report.
Creditors will meet on Thursday, February 8, to determine if the company should be wound up or be subject to a deed of company arrangement.
As of June 2022, The Sydney Collective faced a working capital deficiency of $1.16 million and a net asset deficiency of $2.05 million. By the subsequent year, these figures had escalated to $1.7 million and $4.56 million, respectively. The incurred ATO debt was predominantly accrued in the previous fiscal year.
The primary creditor of the company is the Warwick and Yates Trust, an entity associated with the Short family, to which The Sydney Collective owes $4.41 million.
A related entity, Warwick & Yates Pty Ltd (W&Y), holds the sole ownership of The Sydney Collective and was the ultimate beneficiary of the hotel sales to the Laundy Group.
According to Mr. Farnworth's report, W&Y underwent a significant transformation, transitioning from being a debtor to The Sydney Collective with an amount of $3.5 million to becoming a creditor with a sum of $4.4 million in October of the previous year.
This transaction is subject to scrutiny, as it could potentially be considered a preferential payment. The report highlights that if the said transaction had not taken place, the assets involved could have been accessible to the company for realisation and distribution to the general body of creditors.
“In my opinion, the transaction is capable of being unwound or set aside by a liquidator.”
The Sydney Collective’s assets were listed as a $70,000 Tesla X and a $500 trading account. Mr Short lists his residential address as a harbourfront mansion.
The assets of The Sydney Collective were recorded as a Tesla X valued at $70,000 and a trading account with a balance of $500. Mr. Short has indicated his residential address as a harbourfront mansion located in Vaucluse, Sydney, which was acquired in 2016 for $8.75 million.
The management services offered by The Sydney Collective encompassed security, staff supervision, and license compliance for the venues. However, these arrangements concluded after the sale of the hotels to the Laundy Group in February of the previous year.
Jonathan Jackson, 6th February 2024
