‘Beyond a fire sale’: Pizza stores sold for staggering price
What remained of the once great Criniti's empire has sold for $1 million, not even scratching the surface of the group's whopping $19 million debt.
South Australian restaurant group Brunelli, owned by businessman Raj Patel, bought the remaining six stores, including Parramatta, Castle Hill, Darling Harbour and Kotara in NSW as well as Carlton and Southbank in Victoria for the bargain price of $1 million.
The lowball price is yet another hit to embattled founder Frank Criniti and more so, the dozens of creditors owed millions by Criniti's.
Cracks started to show within the company last year when six locations entered voluntary administration in November, followed by a seventh in January.
In February administrators were ready to sell the company as it stood for $6.1 million to an undisclosed buyer.
According to the Statutory Report to Creditors tendered to ASIC by liquidators Worrells, the $6.1 million deal was virtually done, but then COVID-19 hit and the offer was suddenly off the table.
"Interested parties were originally asked to make an indicative offer by close of business, 21 February 2020," the documents stated.
"At the request of a number of interested parties, the date for submission of offers was extended to 6 March 2020.
"We sought to enter a period of exclusive negotiation with a purchaser to agree to
contract terms for a price of $6.1m.
"The sale process was interrupted by the COVID-19 (coronavirus) pandemic, and the purchaser withdrew their offer."
Mr Patel's bid of $1 million including GST was the "best offer".
According to the report, the $1 million was divided up between 14 separate Criniti's companies, including the six stores, their respective holding companies as well as Crinz Media and Criniti Holdings.
As per the breakdown, some of the companies were sold for as little as $25,000, which according to hospitality broker and owner of Prosperality David Hobbs was "beyond a fire sale".
"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," he said.
"At the very least they should be getting close to three quarters of a million, even in a bad climate.
"That is beyond a fire sale."
Mr Hobbs went as far to say the once popular restaurants, which used luxury motorbikes and sports cars as mere decoration, were for the most part sold for a tiny percentage of what a moderately successful cafe would get today.
It is still uncertain if or which creditors will receive a slice of the million.
Originally published as 'Beyond a fire sale': Criniti's stores sold for staggering price