19 April 2023

Pialligo Estate's $4 million tax bill tops list of creditors far and wide

| Ian Bushnell
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Pialligo Estate: compounding losses and a domino effect of events. The impact has been widespread. Photo: Stephen Ning.

The collapsed Pialligo Estate food and hospitality business has a tax bill of more than $4 million, according to the liquidators’ initial creditors report.

The Australian Tax Office is one of 277 unsecured creditors listed in the report and is owed the lion’s share of the business’s total liability of $6,146,924.28.

Unsecured creditors are owed $5,578,799.85. There are 36 secured creditors named in the report.

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Apart from the tax bill of $4,102,177.44, Pialligio Estate owes money to federal government departments and agencies, utility companies, local and interstate suppliers, contractors, trades, law firms, assorted businesses, employees and customers who had paid deposits.

Even ACT Snake Handlers has not been paid for its services.

When announcing that it was winding up the business last week, liquidators RSM Australia said initial investigations had identified more than 500 secured and unsecured creditors, including more than 200 casual and full-time staff, about 170 suppliers and 110 customers who had paid deposits for future bookings.

The report also lists 218 employees.

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Electricity and gas provider ActewAGL is one of the biggest creditors outside the Tax Office, with amounts totalling $83,172.36, while Icon Water is owed $15,470.70 and Origin Zero $20,308.92.

Federal Government departments include Defence ($2581.15), Industry ($9675), Treasury ($5043.75), Veterans’ Affairs ($1487.50) and DFAT ($1650), while the ACT’s Access Canberra is owed $10,236.25 and the ACT Government $500.

The Australian Federal Police is also owed $2200.

The list of suppliers ranges far and wide and includes wineries, breweries, liquor companies, hospitality suppliers and produce businesses.

Supplier of luxury champagnes, wines and spirits Moet Hennessy has an unpaid bill of $20,462.92 and wine importer Negociants Australia is in for $32,911.97, while Canberra district wine company Pinhooker Pty Ltd is owed $18,175.80. Other local winemakers listed include Clonakilla ($749.23) and Nick O’Leary ($1135.20), among a number of interstate wineries.

Pialligo also chalked up bills to Canberra drinks company Capital Liquor & Bev of $7023.63, brewer Bentspoke ($5723.86), Underground Spirits ($3355) and non-alcoholic drinks maker Altina ($4371.58).

Local produce suppliers left out of pocket include Sea Harvest at the Fyshwick Markets, which is owed $13,646.34, Sonoma Bakery ($4985.36), Longpark Meat Co in Fyshwick ($4411.29), Brindabella Food ($4395.15), PFD Food Service ($13,787.55.) and Fedra Olive Grove at Collector ($6008.56).

Wedding deposits are unlikely to be recovered. Photo: Ryan David Music.

Interstate, Sydney food distribution business Foodlink Australia is one of the biggest creditors at $41,667.75, followed by Select Fresh Providores ($40,592.08).

Hospitality suppliers were also hit, with Alsco Pty Ltd one of the bigger creditors with an unpaid bill of $21,289.17, and Chemworks ($11,138.31), which has an outlet in Mitchell.

Law firms figure strongly, with Pialligo rattling up bills of $28,109.11 with Clayton Utz, $28,737.36 with Trinity Law and $9482.97 with HWL Ebsworth Lawyers.

Pialligo also owes security firm Xtreme Protection Group $21,151.25.

One of the biggest debts to trades is $27,850.50 to GMH Electrical, while Southern Plumbing Plus is owed $9870.79.

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Of the more than 80 individuals listed, many would be those who had booked events and paid deposits. Some are owed more than $10,000.

But it is unlikely customers will recover their deposits.

Now that the business is in liquidation, the 218 employees will be able to access the Fair Entitlements Guarantee (FEG) scheme – a federally funded safety net – to claim their entitlements.

Pialligo Estate owner John Russell said the business’s demise was the result of compounding losses generated by a domino effect of events.

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These included two fires involving two different Estate business premises in 2016 and 2017, increased insurance costs, the impact of natural disasters, the pandemic, supply chain and logistics challenges, staffing issues, lost vintages and farm production, and rising interest rates.

On 29 March, Pialligo Estate’s financiers took possession of the property at Kallaroo Road.

RSM’s Frank Lo Pilato said when announcing the winding up on 13 April that there was insufficient money to pay a dividend to creditors.

The liquidators’ investigations are continuing and a report on the final outcome will be provided to creditors in about three months.

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GrumpyGrandpa1:34 pm 16 Jun 23

The owners of this company might discover that their personal assets are not protected, if they continued to trade, whilst knowing their company was insolvent.

As for those who are suggesting that the ATO can go whistle; maybe not. It’d be interesting to know what the liability to the ATO is made up of. I expect there is a fair bit of employee’s Payg tax and GST involved and those liabilities by their nature, rank ahead of other unsecured creditors. That said, the ATO should have stepped in much earlier and demanded their entitlements, which may have seen the business wound up earlier and reduced the write-offs that other businesses will now incur.

Victor Bilow2:55 pm 20 Apr 23

If this business owes so much money, how the Tax office is still owed $4m is beyond me.
The Tax office should be the last people to receive money after all other moneys are paid and a full audit is complete as this business for all intents and purposes have not made money and the ATO is owed ZIP or owes the business a large refund or a large scam has occurred. The ATO is always No 1 at the door and leave nothing but ash’s.

Trish O'Connor2:42 pm 20 Apr 23

Owner John Russell forgot to mention not paying bills as a reason for going broke !

ChrisinTurner2:06 pm 20 Apr 23

Seems like the ATO were turning a blind eye! Unbelievable.

Nathan Weller10:01 am 20 Apr 23

Yet the owner/owners are allowed to continue to own other businesses within the ACT. They owners knew it was going broke, the owners knew what was going to happen way before it did. Complete lack of care or respect to their staff, to the people they took deposits from and everyone they owe money to. Should be made to sell all their financial interests in any business they have to pay everyone back.

@Nathan Weller
“Should be made to sell all their financial interests in any business they have to pay everyone back”
Yes, Nathan.

It’s interesting that on one hand totally dissociated income sources can be related to provide tax avoidance (negative gearing = loss on an invetsment property can be offset against totally unrelated PAYG income), yet a Pty Ltd suffix for a company corrals the income as separate entities so that creditors can be dudded.

Garry Johnson1:03 pm 21 Apr 23

John owns the Rex also and thinks his some main player in the hospo world. That he is NOT…

So, were they trading while insolvent and taking deposits from customers while insolvent? And while we are at it, what the hell was the ATO doing while a $4 million tax bill was being racked up? Did it not occur to the ATO that if they were owed $4 mill there would have been a whole lot of other victims queuing up?

Capital Retro6:07 pm 19 Apr 23

Not too long ago, most businesses supplying the hospitality industry would have had an in-house credit manager or they would have engaged the services of a local debt collector. Not anymore it appears.

Having said that there is no excuse for government controlled utilities, especially energy suppliers, because having the power (no pun intended) to disconnect the electricity, gas and water should have minimized their (actually ours) losses.

I hope our part-time opposition asks some questions in the Legislative Assembly.

And before someone else says it, “CR, you’re dreaming”.

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