Thursday 12 February 2015

Bankruptcy notice reactivated as Paola Toppi successfully defends former friend's high court appeal

Paola Toppi, co-owner of the popular Machiavelli restaurant on Clarence Street, has resurrected bankruptcy proceedings against her former friend and business partner Dolores Lavin after the High Court yesterday threw out Lavin's application to have an earlier decision of the Supreme Court overturned.

As of today Lavin has 13 days to comply with a demand she pay Toppi and her husband Neil Cunningham up to $1.2 million. It's almost 10 years since the pair began borrowing millions of dollars from NAB to start and fund their Luxe Studios photographic business.

By 2009 the relationship had soured. Accusations of gambling debts emerged. Toppi was locked out of the Luxe premises on Liverpool Street Darlinghurst. She retaliated, installing receivers in January, 2010. They sold off the Liverpool Street property in June of that year for $4.9 million. NAB then commenced recovery proceedings against all three and their related entities, seeking an additional $4.25 million.

Toppi and Cunningham eventually made good their $2.9 million share of their obligation as co-sureties to NAB by selling their home, although they wore a $1 million haircut on the sale because an earlier offer of $5.6 million had to be declined because at the time the offer was made, the Liverpool Street property had not sold.

Lavin meanwhile had made her own settlement with NAB, paying out $1.35 million and negotiating a deed of settlement that included a covenant from the bank that it would not sue her in relation to the matter. Toppi and Cunningham reasoned that Lavin, as a co-surety to the loans from the beginning, appeared to have extricated herself for a lot less than it had cost them. They initiated proceedings to recover around $800,000. Lavin for that matter launched action to recover $400,000 in excess interest she said accrued because of Toppi's decision to appoint receivers.

Ultimately Toppi and Cunningham's action led to a judgment debt and the issuing of a bankruptcy notice against Lavin in 2013. There have been multiple stays but yesterday's High Court ruling is the end of the line for Lavin in terms of avenues of appeal. The clock is ticking. A creditor's petition hearing must be considered imminent unless Lavin can engineer an alternative.

Toppi and Cunningham were represented by Beazley Singleton Lawyers whilst Lavin was represented by Websters Lawyers.

For an in-depth account of this sorry saga see: Toppi seeking to bankrupt ex-bestie. The High Court's determination can be read at: Lavin v Toppi [2015] HCA 4 (11 February 2015)

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