EXCLUSIVE: Brisbane's Caxton Street Festival Facing Liquidation Over Payment Dispute

A group of musicians and other suppliers who worked at this year's Caxton Street Festival in Brisbane are pushing for the event to be placed into administration after receiving advice from the accountants of its organising body that they would only be paid about half of what they are owed.

According to documents sent to creditors by Ham Bros Chartered Accountants, and obtained by The Music, reduced ticket sales and lower-than-expected revenue on the day of the event have led to a shortfall in funding that would result in outstanding debts being paid at the rate of "no less" than 50 cents in the dollar.

However, in order for that offer to proceed (and for the festival to stave off liquidation), unanimous agreement was required among all the event's creditors by yesterday, 2 December — and, with the deadline now passed, that has not happened. 

Sources involved directly in the dispute have informed The Music that, although the vast majority of creditors were keen to take the offer and move on, several individuals presently owed money by Caxton Street Festival have communicated that they will not be accepting the proposal, all but guaranteeing — save for last-minute intervention — the event's fall into administration.

There is no insinuation of impropriety on the part of the festival's organisers or affiliates.

Still, it remains unclear exactly at which point, after the event, it became apparent that it would not return a profit in 2016. 

Creditors were first approached on 4 November, more than a month after the festival's 2 October date, with initial advice explaining that the event "did not, as it has in the past, achieve anticipated revenue from ticket sales, in addition to which other revenue was well down on previous years".

"A drop of almost 50% was recorded in relation to ticket sales compared to previous years, whilst costs to run the festival have also increased this year," the letter reads.

A second letter, dated 21 November, elaborates on the event's financial position, explaining that, after collating its outstanding invoices, Caxton Street Festival came up $143,151.31 short on a $312,856.59 creditor bill. According to the correspondence, the festival has $169,705.28 in cash-at-bank.

Ham Bros strongly discouraged the event's suppliers from pursuing liquidation, advising them with respect to their initial offer, "Given the lack of funds, we believe this is a sensible, if unfortunate, commercial proposal which we would urge you to consider and accept".

"We are also a creditor and will be accepting the offer as being in our own best interests financially," they wrote, explaining that the "very costly" process of liquidation would see at least $75,000 drained from the pool of available funds.

The Ham Bros letters explain that the loss is the first in the event's 22-year history, which includes its lengthy stint as the Caxton Street Seafood & Wine Festival until its rebranding effort under its new moniker last year. 

The event is one of Brisbane's longest-running street festivals, with this year's iteration including the likes of Urthboy, Last Dinosaurs, Cub Sport, Stonefield and more, alongside local musos and other workers.

However, despite the drawcards on the line-up, the festival's placing on the calendar — during the Queen's Birthday weekend, directly against other events including Listen Out festival — may have limited its ability to repeat its evidently stellar 2015 performance.

One musician affected by the revenue shortfall, percussionist and drummer Stephen Caruana, has been actively resisting Caxton Street Festival's proposal since first receiving it from Ham Bros. In his opinion, expecting the event's creditors to independently reach a unanimous agreement in a matter of days is a "ludicrous" ask on the part of the accountants, he said.

Caruana, who performed at this year's event with local group The Mad Mariachi, also believes that the issue is one of principle, and that expecting suppliers to take a reduced cut "simply plac[es] the liability towards the wrong people" in the case of a shortfall in expected revenue.

He has consequently advised Ham Bros — after several apparently unanswered messages — that he and his supporters would not accept the festival's offer, he told The Music.

"We suppliers are not liable for the failures of the festival," he said. "We expect payment in full."

Along with the overall loss incurred in 2016, adding to the creditors' frustrations is the fact that the festival actually achieved a 300% growth in profit from 2014 to 2015 — according to its own producers, The Follow Agency — and was also approved for funding under the Brisbane City Council's Establishment & Co-ordination Committee's Suburban Festivals 2016-17 program back in July.

The Music sought comment from the committee, through the office of member councillor Matthew Bourke, regarding specifics of the funding, but were unable to clarify exactly how much of the total $738,109 pie disseminated among all of the program's recipients was received by Caxton Street, or whether that money was available in time for this year's festival.

Caxton Street Festival is organised and run by the Caxton Street Development Association co-operative, a 15-year-old community affiliation of volunteers comprising individuals involved with various businesses located on the popular wining-and-dining street. Its present board includes president Sarosh Mehta — the former manager of now-closed restaurant Casablanca — and the Caxton Hotel's Ann Johnson, who serves as secretary and treasurer.