A la carte restaurant Lentil as Anything may have been illegally marketed

Pay-per-view restaurant chain Lentil as Anything – a Sydney and Melbourne foodie destination for vegetarians – may have broken the law by trading for three years when it was “likely” insolvent, administrators say.

The social enterprise was founded 21 years ago by Shanaka Fernando, a Sri Lankan-born Australian restaurateur and self-proclaimed ‘social challenger’, with restaurants in Brunswick, St Kilda and Abbotsford Convent, as well as Newtown in Sidney.

“Lentil as Anything is more than just a restaurant,” the website reads. “We are a movement for social equity and inclusion.”

“Our restaurants do not have fixed prices. Everyone is welcome to come and have a meal and Pay-As-They-Feel: by a financial contribution or volunteering. Everyone leaves feeling part of a inclusive community.

At one point, according to Fernando, Lentil as Anything was providing more than a million meals a year, 30% of which were paid for.

But the Lentil as Anything group went into administration in February this year, leaving behind staff who owed more than $369,000 in unpaid wages.

Accounting firm Worrells was appointed to wrap things up and, in a report to creditors, described several irregularities in its discovery.

“Our preliminary position is that the company was likely insolvent since at least June 30, 2019, and likely earlier,” the Worrells report said.

Known as an insolvent trade, regulators can pursue civil or criminal offenses in such a case.

There were also “material deficiencies” which “render the books and records in their present state insufficient to permit the preparation and auditing of true and fair financial statements”, continues Worrells.

The creditor’s report revealed the chain owed at least $110,000 in employee rights and $258,491 in pensions when it folded in February – meaning creditors owe nearly $600,000.

Major creditors include Abbotsford Convent, which owes $85,000, and the Australian Taxation Office, in addition to dozens of smaller suppliers.

What was owed to staff was a little more difficult to determine – some staff worked as ‘volunteers’ and received a stipend rather than a salary.

Employees will be able to apply to claim some of their entitlements (up to 13 weeks’ pay) through the federal government wage recovery programyet.

This is the latest in a series of dramas for social enterprise – in 2020 Lentil as Anything faced regulatory action from the Fair Work Ombudsman and the Australian Tax Office.

Nine newspapers last year he claimed to have seen a confidential forensic report that said $11,279 of the registered charity’s money could have paid for Fernando’s private expenses – like his electricity, water bills and gas and its movements.

But Fernando denied the allegations, saying the former board that commissioned the report was out to get him – and issued defamation threats against Nine newspapers over the reports.

“After 21 years, I live without assets or savings. I find the tone of the accusations you have conveyed as hurtful and ultimately a vicious attack on a service that has provided many people in times of need,” he told newspapers.