Pay-as-you-feel restaurant chain Lentil as Anything — a Sydney and Melbourne foodie destination for vegetarians — may have broken the law by trading for three years while “likely” insolvent, administrators say.
The social enterprise was founded 21 years ago by Shanaka Fernando, a Sri Lankan-born Australian restaurateur and self-marketed “social challenger”, with restaurants in Brunswick, St Kilda and Abbotsford Convent, as well as Newtown in Sydney.
“Lentil as Anything is more than just a restaurant,” the website reads. “We are a movement for social fairness and inclusion.”
“Our restaurants have no set prices. Everyone is welcome to come for a meal and Pay-As-They-Feel: through a financial contribution or volunteering. All leave with the feeling that they are part of an inclusive community.”
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At one stage, according to Fernando, Lentil as Anything provided more than 1 million meals a year — 30% were paid for.
But the Lentil as Anything group went into administration in February of this year, leaving behind staff owed more than $369,000 in unpaid wages.
Accounting firm Worrells was appointed to wrap things up, and in a report to creditors outlined several irregularities in its discovery.
“It is our preliminary position that the company was likely insolvent from at least 30 June, 2019, and likely earlier,” the Worrells report read.
Known as insolvent trading, regulators can pursue civil or criminal offences in such an instance.
There were also “material deficiencies” that “render the books and records in their current state insufficient to enable true and fair financial statements to be prepared and audited”, Worrells continues.
The creditor’s report found that the chain owed at least $110,000 in employee entitlements and $258,491 in superannuation when it folded in February — which means creditors are owed nearly $600,000.
Among the major creditors are Abbotsford Convent, which is owed $85,000, and the Australian Taxation Office, in addition to dozens of smaller suppliers.
What staff were owed was a little more difficult to ascertain — some staff worked as “volunteers” and were paid a stipend, rather than a wage.
Employees will be able to apply to claim some of their entitlements (up to 13 weeks’ wages) through the federal government’s wage recovery scheme, however.
It’s the latest in a string of dramas for the social enterprise — in 2020, Lentil as Anything was on the receiving end of regulatory action from the Fair Work Ombudsman and the Australian Tax Office.
Nine Newspapers last year claimed it had seen a confidential forensic accounting report that alleged $11,279 of the registered charity’s money may have paid for Fernando’s private expenses — like his electricity, water and gas bills, and travel.
But Fernando denied the allegations, saying the former board who commissioned the report was out to get him — and issued defamation threats to Nine Newspapers over the reports.
“After 21 years, I live with no assets or any savings. I find the tone of the accusations you have conveyed as hurtful and ultimately a vicious attack on a service that has provided for many in their time of need,” he told the papers.