It could be a sticky end for the husband and wife team Tom (or Tamir) and Lilly Haikin, who amassed a fortune after opening the first Max Brenner chocolate bar in Paddington in 2000 – pioneering a model that has been taken to the United States, Japan, Russia, Singapore and China. The couple hit BRW's Young Rich List in 2013 with a reported fortune of $40 million. But an expensive overhaul of the company's head office in Alexandria, in Sydney’s inner south, appears to have been a major cause of financial pain – hitting its cash flows so hard it stopped paying staff superannuation for the last six months of 2016. Tom and Lilly Haikin introduced Max Brenner cafes to Australia. Credit:Tamara Dean A letter sent to staff in February 2017, obtained by Fairfax Media, said the renovations were “a major landmark” that “prepares us for the growth that lies ahead”.

“However, as a result of these investments, we are currently refinancing several areas of the business," it said. "This process is unfortunately taking longer than originally planned and is having a temporary effect on cash flow.” As a result, superannuation deposits had been “delayed” and would eventually be paid in full. One worker was paid the superannuation they were owed, plus 10 per cent interest, by the end of April that year, documents show. Max Brenner bought the Doody Street office for $7.4 million in 2012, and then sold the building for $40 million in December 2017, land registry documents show. It is not known how much the company spent renovating it. Most of the building, which houses a Max Brenner store on the ground floor, has now been put up for lease. Meanwhile, things were falling apart in stores, according to one former worker, who declined to be named but provided documents proving she was an employee.

At one point in late 2017, the company fell so far behind in supplier payments that ice cream deliveries ceased, she said. “They would get us to take petty cash from the register and walk up to the Coles and bring back litres and litres and litres of ice cream,” she said. “It was the same with milk.” Max Brenner started life as a chain of chocolate shops in Israel in 1996. The parent company was sold to food company the Strauss Group in 2001, which in turn sold it to its Israeli franchisees, Yaniv Shtanger and Dudu Vaknin, in May last year. The parent company told Fairfax Media it intended to keep the Max Brenner brand going in Australia and was looking for new local partners. “We are looking for a new franchisee in Australia,” a company spokesperson said. “The business is good, we are developing the brand.”

In August last year, The Australian Financial Review reported that former Packer-family lieutenant Glenn Wein was looking to rescue the local Max Brenner business with a debt package for its bankers, led by National Australia Bank, which were owed $50 million. Mr Wein’s rescue appears to have gone ahead. NAB is no longer a secured creditor and no other banks are involved in the collapse, and Mr Wein is one of several secured creditors owed money by the Max Brenner business. Signs of trouble persisted, however, with a Queensland plastering business, Sunstate Ceilings Pty Ltd, attempting to wind up the company in June this year over unpaid debts. “We had no knowledge of any problem,” said Guy Meredith, from Gadens Lawyers, who acted on behalf of Sunstate. He said the debt was promptly settled. Companies associated with Mr Wein were behind two of the four mortgages over the Haikins' trophy home. NAB also had a mortgage on the property.

The Haikins put the Bellevue Hill trophy home on the market in recent months with an asking price of $30 million. A sale was secured last month and reported by Fairfax Media last Sunday. That same day, the Haikins agreed to put the chocolate chain into administration “due to escalating costs and tighter retail trade”. Max Brenner declined to comment for this story, but released a statement saying that despite previous success, "the brand has struggled with exceedingly challenging commercial terms", which included "escalating rent, finance and employment costs". "These factors have made it unattainable to continue to operate effectively under the current

circumstances," the statements says. "Max Brenner Australia remains open for business as usual at this time. Chocoholics are

respectfully invited to show their support by enjoying a hot chocolate."

Administrator McGrathNicol is expected to advertise for potential buyers of the Max Brenner business on Monday. The administrator would not comment on whether the Haikins – both directors of the business – or a secured creditor had proposed a deed of company arrangement to restructure the business and regain control. The first creditors' meeting will be held on Thursday. patrick.hatch@fairfaxmedia.com.au