Australia’s largest gay and lesbian publisher should be put into liquidation for failing to pay over $650,000 to the Tax Office and suppliers, the Federal Court has heard this week.

As Crikey revealed earlier this month, the Australian Tax Office is seeking to wind up Evolution Publishing, which produces glossy magazines SX in Sydney, MCV (Melbourne), Queensland Pride (Brisbane) and Blaze (Adelaide).

Court documents filed on behalf of the ATO this week claim Evolution owes $407,278 in unpaid employee income tax, GST and “administrative penalties”. Evolution’s printer, Blue Star, also wants the company wound up after it failed to comply with a statutory demand to pay $258,000. This means the company has immediately payable debts over $665,000.

Evolution’s financial woes don’t end with the two winding-up applications. Crikey has spoken to a raft of former staffers who complained to the ATO after discovering they had not been paid superannuation – in some cases for over a year. Evolution director Mark Anthony later admitted the company had outstanding super contributions and vowed current and former employees would not be left out of pocket. Freelance contributors also allege they were routinely paid months late and are owed significant amounts in back pay.

A former employee, who asked to remain anonymous, recently told Crikey: “I’ve never come across an operator like Evolution Publishing … They’ve treated people appallingly. It’s no great surprise everything is falling apart around them.”

Former SX editor Serkan Ozturk has also launched an unfair dismissal case against the company, with a conciliation hearing slated for April 9 if the company is still operating. Ozturk was fired earlier this month after raising concerns about unpaid superannuation and the financial state of the company.

According to several sources, Evolution has been telling staff and advertisers Evolution Publishing will close and a new company, “Evo Media”, will commence operations to keep the mastheads and websites running. Evo Media was created soon after the ATO issued its wind-up application and was registered by Dean Bell, Evolution’s general manager.

It is unclear how Evolution Publishing’s assets — including its mastheads — could be moved from the distressed company into Evo Media. If the company is declared insolvent, a liquidator would likely try to sell off assets to recover creditors’ losses. This brings into question Anthony’s claim in a March 7 statement: “These matters and the legal processes involved do not impact the day-to-day production of Evolution Publishing’s mastheads.”

Anthony has not responded to a detailed list of questions from Crikey.

Evolution was given a short lifeline yesterday as creditors agreed to adjourn the winding-up application for two weeks so the parties could negotiate. The winding-up applications will next be heard in the Federal Court on April 5.