Crisis meeting as Versace hotel owners face going bust
PALAZZO Versace condominium owners have called a crisis meeting, saying their body corporate company faces going bust after the closure of the luxury hotel amid 'severe financial stress' on its Chinese owners.
The 'six-star' Gold Coast hotel closed abruptly on Friday after laying off more than 200 staff without pay.
The hotel said it was 'temporarily closing' for 'maintenance and rejuvenation'. But staff were furious after initially being told they could take holidays and long service, only to be informed last week that 'regrettably … we are unable to process leave requests due to financial constraints'.
Now, the owners of Palazzo Versace's luxurious condos - where celebrities including U2, the Rolling Stones, Pink, Johnny Depp and Snoop Dog have shacked up - have called an extraordinary general meeting to vote on putting their body corporate company, Euthella Ltd, into liquidation.
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In a notice of the meeting, obtained by The Courier-Mail, Euthella says it relies on contributions from its members to operate.
"Whilst the company has significant costs to cover (principally relating to the upkeep of the
hotel and condominium premises), the company does not itself conduct any
revenue generating activities," it says in the statement to shareholders.
"The majority of contributions to the company are sourced from the member of the company associated with the Palazzo Versace hotel.
"To date, those members of the company that are connected to ownership of
condominiums have been punctual in payment of their contributions to the
company, the member of the company associated with the hotel has been unable
to meet its contributions in a timely manner.
"This would suggest that the hotel is in severe financial stress and has/will have significant cash flow problems."
Euthella claims the upkeep of the hotel and common areas 'continues to deteriorate ... providing further evidence of the parlous financial position of the hotel'.
"The current economic climate, and in particular, the impact of the coronavirus on the hospitality industry in Australia, suggests that the hotel's financial fortunes will not be reversed in the foreseeable future," it says.
"The representatives of the hotel on the board of the company have refused to sign a declaration that the company is solvent in the context of a proposed members' voluntary winding up resolution.
"As such, there are genuine concerns that the company is insolvent or may soon become insolvent given that the majority shareholder in the company (and source of majority funding for the company) is in severe financial stress and its representatives are unable to confirm that the company is in fact solvent.
Euthella director Nicole Fitzhenry has recommended the company be wound up and liquidators appointed.
Fellow director Frank Picone - a Gold Coast management rights identity who has owned several multi-million dollar Palazzo Versace condos including one bought from Clive Palmer - is understood to support her recommendation, according to the shareholder notice.
The Euthella Ltd meeting has been set down for the Palazzo Versace boardroom on April 24.
Palazzo Versace opened in 2000 as the world's first Versace-branded hotel, with opulent fixtures and furnishings from the famous Milan fashion house.
The developer, Sunland, sold the Main Beach property to China's Dong Run group for almost $70 million in 2012.
Originally published as Crisis meeting as Versace hotel owners face going bust