OE Cafe deep in debt
A recently-closed Palmerston North cafe owes nearly half a million dollars to more than 30 businesses, and only had $78 in cash when it went under.
OE Cafe closed about a week ago, after three years of trading out of The Square Edge building on The Square.
The owners placed the business into voluntary liquidation, with Hamish Pryde and Brent Dickins of CS Insolvency winding down the company's affairs.
They released their first liquidation report late last week, which outlined the reasons behind the closure and the business' financial situation.
The cafe - owned by a landscaper, a scientist and a robotics engineer - was founded to supplement the owners' fulltime careers, the report said.
But the business failed, because the owners were unable to make enough money to cover costs.
At the time of closure, OE Cafe owed various parties $439,000.
Four now-former employees were owed $5468 in holiday pay, while Inland Revenue is due $268,000 in taxes and penalties.
A $20,000 bank loan was also outstanding.
More than 30 businesses and groups - including the Palmerston North City Council, ACC and Destination Manawatu - are owed $26,000.
The three owners - Alan Cleland, Michael Cook and Milan Gagic - are also out of pocket, to the tune of $119,000, after putting some of their own money into the failed venture.
There is likely to be a massive shortfall though, as OE Cafe only has $15,900 in assets.
Most of that is equipment and money due to the business, as it only had $78 in cash at the time of closure.
Dr Gagic, a scientist by trade, previously told the Manawatu Standard a lack of time and disagreements had made the cafe hard to run.
"It's a brilliant premises but unfortunately none of us actually had the time to work there and because of that it wasn't really viable to keep it going.
"I have no doubt somebody will use that site as a cafe again, perhaps under a different name but with a similar experience to what we offered. The site is really unique in Palmerston North for a cafe. It's got facilities no other cafe has in town with the galleries."
Square Edge is home to artists' studios, shops, art galleries and performance and rehearsal spaces.
OE is the second cafe to close in the past year, with George St cafe Mao Bar closing about the same time last year. That business was in a slightly better financial position than OE, with $266,000 in debts and $700 in the bank.
Mao's liquidation is ongoing, with a report due from liquidator Lyn Carey of McKenzie and Partners in March.
- © Fairfax NZ News
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