$300,000 is at the centre of a falling out between two Sydney hospo heavyweights

An ongoing dispute over more than $300,000 in wages, supplier invoices and management fees led to the abrupt collapse of a business partnership between two Sydney hospitality heavyweights, Public Hospitality and Love Tilly Group.

The split, announced on November 3, sparked the immediate closure of shared ventures Fabbrica Pasta Bar in Balmain and La Salut in Redfern, and halted plans for a forthcoming Fabbrica Pasta Bar in Annandale.

Public Hospitality owns several hotels in Sydney, including The Norfolk in Redfern, as well as the award-winning bar Maybe Sammy. Love Tilly Group formed in 2010 and has grown to include venues such as Ragazzi and the original Fabbrica Pasta Shop in the city.

Love Tilly Group managing director Matt Swieboda today revealed the “devastatingly difficult” decision came after Public failed to address mounting concern over unpaid invoices.

“The reason the Love Tilly Group terminated the partnership with Public Hospitality is because management fees and reimbursement for wages were not paid and the debt exceeded $300,000,” Swieboda said.

“When questioned about payment, Public Hospitality made numerous promises, but never followed through and the debt continued to accumulate.”

The allegations, denied by Public Hospitality, have sparked a complex legal battle in which both parties say they are the victim of financial loss. Good Food does not suggest either party is at fault, only that they are in dispute.

A spokesperson for Public Hospitality said they sought legal counsel after allegedly uncovering “alarming” anomalies and irregularities in invoices issued by Love Tilly Group.

“Public’s preliminary view is that it has very significantly overpaid Love Tilly Group and has instructed its lawyers to take steps to recover those monies,” the spokesperson said.

“Public is committed to further growth across the hospitality industry with like-minded partners, upholding its values of transparency and integrity.”

In documents provided to Good Food, legal representatives allege Love Tilly Group overcharged Public Hospitality “to the tune of almost $200,000” in staff wages, $43,500 in “wrongfully charged tips”, and was liable for $575,000 in lost profit.

Swieboda has hit back, alleging Public Hospitality fabricated the financial discrepancies to sway public opinion in their favour.

“They’re spurious claims,” Swieboda said. “We are absolutely the true victims here.”

Swieboda said, under the terms of the joint management agreement, Public Hospitality took 100 per cent of the revenue and was required to reimburse Love Tilly Group for wages it paid to staff at affected venues.

“All wages are up-to-date from our side, however Public Hospitality has not reimbursed Love Tilly Group for these wages for some time,” Swieboda alleged.

Love Tilly Group further alleges Public Hospitality “frequently” failed to pay invoices from suppliers by their due date.

“[This] often [led] to suppliers refusing to deliver products until debt was cleared,” Swieboda said.

“[These were] suppliers … we’ve worked with for many years and have great relationships with, respect and appreciate.”

The spokesperson for Public Hospitality said parties were in discussion to resolve the disputed invoices when Love Tilly Group publicly announced their intention to step away from the partnership. Through these talks, the companies resolved the issue of management fees (though not before Love Tilly Group issued a notice of termination, Swieboda alleged).

“On Friday … staff at Fabbrica Balmain and La Salut were informed of the venues’ immediate closure as a result of the termination by Love Tilly Group,” the Public spokesperson said.

“Public was disappointed by this development.

“Even though all Fabbrica Balmain and La Salut venue staff were employed by the Love Tilly Group, Public is offering employment to those individuals affected.”

La Salut, a Spanish wine bar owned by Public, is expected to reopen at The Norfolk Hotel in the coming weeks.

Swieboda said affected staff were informed of the impending closures before the public announcement, and “the majority” were offered alternative positions within Love Tilly Group.

Public Hospitality became a key player in the Sydney hospitality industry this year. According to a report by the Australian Financial Review, the group has acquired around 22 properties estimated to be worth $750 million. Among them are new Paddington vinyl bar Busby’s (inside Oxford House), award-winning cocktail bar Maybe Sammy and The Strand Hotel, and Melbourne’s Clifton Hotel in partnership with chef Guy Grossi.

The group also brought on significant industry talent, including culinary director Clayton Wells (ex-Automata), the entire Maybe Sammy group, and Rico’s Tacos chef-owner Toby Wilson. None are involved in the company’s management, including the issues in dispute with Love Tilly Group.

Love Tilly Group is comparatively smaller, with five venues including Potts Point wine bar Love, Tilly Divine and the new fine-dining restaurant Palazzo Salato in the CBD.