ROYAL OAK OPERATORS FELLED FROM GRACE

The company owned by a former digital strategist and self-proclaimed psychic has fallen into administration, owing hundreds of thousands of dollars to staff and creditors, having not turned a profit.

Rahni Newsome promotes herself as an experienced freelance digital marketer, as well as advertising her services as a ‘psychic consultant’.

In 2021 she moved to Queensland to be with her daughter, Kristi Horvath, and together in May that year they opened the Commercial Hotel in Biggenden, around 100 kilometres west of Hervey Bay, under an entity unpretentiously named Australian Hoteliers P/L.

After a little over a year the pair sold it to the current owners, and headed south to take over the operations of the Royal Oak Hotel in Cessnock from Joel Smith – a growing local operator who already owned two other Hunter Valley hotel freeholds.

The Royal Oak, built 1922 at the gateway to the Hunter Valley, features multiple income streams, offering a bar, bistro, beer garden and separate café, but no gaming.  

For eight years it was run by doctor-publican John Harvey, before he was forced to list it for sale in 2019 over a dispute with the ATO. The following year it was forced to close and Worrells Insolvency & Forensic Accountants soon listed it for sale again.

Remaining dormant throughout the shutdowns and reopening stages, in April 2021 it was sold to the current owner, who subsequently on-sold the leasehold to Newsome and Horvath in April 2022.

Lacking the resources and budget of a larger group, the mother and daughter team began reopening in stages.

But by early 2023 the dream was over and they paid to exit the five-year lease.

Following that, short-term business lender On Deck Capital Australia P/L filed a motion in the Supreme Court, which triggered liquidators PCI Partners to be appointed.

In a report to creditors this month, PCI outlined that Australian Hoteliers was unable to generate a profit from either hotel business, that the company’s failure was the result of losses incurred at both hotels, and that the directors had “not made any meaningful progress towards paying their debts and the costs of liquidation”.

The total amount owing is said to be $217,022.23, which includes nearly $99k to On Deck. Other amounts include over $69k in unpaid taxes, and almost $30k to former employees, for outstanding superannuation payments.  

PCI says the employees will be treated as priority creditors, and will be repaid – should sufficient funds be raised. It is unclear whether the employees owed money were staff at the Biggenden or Cessnock pubs, or both.

The receivers doubt, given the cost of recovery action against the likely financial return, that sufficient money will be secured “to enable a dividend to be paid to creditors”.

But the buck may not stop there, as Australian Hoteliers P/L is being accused of having potentially traded whilst insolvent, which as per the federal Corporations Act could make the directors personally liable for the company’s debt.

The answer as to whether or not the company traded whilst insolvent will require further investigation, and the cost of this will likely need to be funded by the creditors, which suggests they will be confident of director assets before proceeding.