The Australian Taxation Office has made an application to the Federal Court to wind up convenience store chain, City Convenience Store Pty Ltd.
According to a notice lodged with the Australian Securities and Investments Commission, the Deputy Commissioner of Taxation brought the action against the company on September 22, with a hearing in the Federal Court in New South Wales set for October 28.
City Convenience Store Pty Ltd is owned by Gebara Group Pty Ltd, which is under the directorship of Jamal Gebara. Gebara Group Pty Ltd also owns the company City Convenience Store Leasing Pty Ltd, which according to an ASIC notice published today, is in liquidation.
Jamal Gebara founded the “City Convenience Store” chain in Sydney in 1998 and according to the City Convenience Store website, the business was at one point operating as many as 180 convenience stores. In 2003, an article on the business from Fairfax highlighted that the company had grown to 68 stores across the nation.
This is the second wind-up application to be lodged against City Convenience Store Pty Ltd this year, with Frucor Beverages (Australia) Pty Ltd filing a wind up application against the company in the NSW Supreme Court in May.
ASIC documents show a winding up order against the company was dismissed in June, before the ATO made the new claim in September.
The City Convenience Store website lists “City Convenience Store Pty Ltd” as the owner and operator of the businesses.
The website gives details of a number of stores across Sydney and Melbourne, located in the CBD of both cities and has a page for expression of interest for franchise opportunities.
However, the phone numbers for several stores SmartCompany contacted this morning have been disconnected.
SmartCompany made multiple attempts to contact City Convenience Store via phone and email but no response was received prior to publication.
ATO on the lookout for business debt
According to Patrick Coghlan, commercial director of credit reporting bureau CreditorWatch, the ATO has changed the way it pursues businesses in debt during the past 12 months and is now responding to calls from the business community by getting “a little more serious” and not allowing debt levels to get as high as they previously would before intervention.
“There is pressure coming from the Australian business community as a whole,” he told SmartCompany.
“Particularly small businesses, because the longer it takes for a seemingly insolvent company to be wound up or closed, the worse it is for business.”
If a business does find it is unable to service its debts, it is important to act fast, Coghlan says.
“It’s the best thing for struggling businesses out there – for those businesses to contact the ATO as soon as possible,” he says.
“The ATO will try to work with them.”
There are no hard and fast rules around when the tax office will take action against a business in debt – it will take a variety of factors into account, including the amount owed and how long it has previously taken a company to pay off liabilities.
But for suppliers and creditors looking to find out more about a business before working with it, it is important to understand all connected businesses and operations.
“You want to be able to see all of the related entities and how they are trading,” says Coghlan, because once a company gets in trouble it can potentially use related entities to temporarily offset the issues.
“You want to set up some kind of monitoring or alerts – they may look fine now, but maybe not in a month or a year,” he says.