Hospitality

01 October 2021The High Court has dismissed an application by a landlord creditor to overturn a company voluntary arrangement (CVA) implemented by coffee shop chain Caffé Nero. The CVA, previously approved by its creditors, compromised rent arrears and reduced future rents for the company's premises. The decision follows a series of previous high-profile challenges to retail and leisure CVAs.22 July 2021Young, one of the Caffe Nero's landlords has challenged the CVA in court.Marking the start of a four-day trial, the company said that Young, has no right to bring the challenge due to an arrangement he has with EG Group Ltd. EG is run by Mohsin and Zuber Issa, billionaire brothers who launched a takeover bid for Nero on the eve of the CVA vote.04 January 2021Some landlords, including Lord Sugar, are seeking to challenge Caffe Nero's CVA. The chain had proposed landlords receive 30p for every £1 of rent they are owed, and was seeking to move most stores to a turnover-rent based model. If there are any closures these are expected to be minimal.13 November 2020Last night coffee chain, Caffe Nero put itself into a company voluntary arrangement.Founder, Gerry Ford, explained that this was due to the second lockdown which has caused the chain to suffer, from limits to socialising, less shoppers in town centres and workers being told to work from home.KPMG are working with the company on this insolvency procedure. The CVA needs to be backed by landlords and creditors to be successful.The hope is that from doing this, rent negotiations can be made with landlords, so costs can be reduced and the company can be in a better position to rebuild itself post-pandemic.The chain employs more than 6,000 people across its 800 UK stores. Any job losses or store closures are unknown as of yet.6 November 2020A group of Lenders to Caffe Nero have been reported to of drafted in FTI Consulting.The financial advisers have been brought in by Alcentra and Partners Group, in preparation for the launch of a restructuring deal, involving a CVA, which could result in permanent store closures and job losses.23 October 2020Caffe Nero becomes the latest big name to look into a company voluntary arrangement.The insolvency mechanism is being considered since the coffee shop operator has been hit from coronavirus, alike many other high street hospitality businesses. It needs to restructure its financial liabilities, reduce its rent bill and exit loss making outlets.Details concerning the amount of shop closures or job losses are so far unclear.KPMG are working with Caffe Nero on its options.As it stands current, it operates from 660 UK stores, of which more than 90% have opened since the UK-wide lockdown ended in June and employs 5,000 staff.

It has been reported by Propel that Loch Fyne, which is owned by Greene King, has received approval for a company voluntary arrangement (CVA). The company has been working with restructuring firm Resolve on the process, which will see it exit leases on 11 sites, where it has already vacated.The CVA will leave Loch Fyne with ten sites in locations including Ascot, Cambridge, Portsmouth and York. A Greene King spokesman told Propel: “Loch Fyne has been severely impacted by the covid-19 pandemic and the resulting social restrictions. Following advice from an insolvency practitioner, a CVA was proposed to creditors, which has now been approved and will enable us to hand back to landlords a number of sites that are already closed and no longer needed within the Greene King estate. There are no job losses as a result of this and we are looking forward to reopening a smaller number of profitable and well-run Loch Fyne restaurants, which will continue trade once restrictions ease.”Last October, Greene King permanently closed 11 of its 21 Loch Fyne restaurants. The company acquired the then 36-strong Loch Fyne business for £68m in 2007. More than two years ago, it explored its options for the business, including a possible sale, and has disposed of a number of individual Loch Fyne restaurants during the past 18 to 24 months.With the CVA proposals, just 10 UK sites will remain including some located in London, York and Scotland.

2.12.2020Gerry Ford,  the controlling stakeholder of Nero Holdings, pledges a £5m survival fund for Caffè Nero.Creditors of the coffee chain voted earlier this week and approved a CVA after the board refused to adjourn the vote following late emergence of a takeover bid.As part of the CVA, on the condition it was approved, shareholders committed to provide a £5m standby fund for the business, in case additional liquidity was needed. This is to be particaulary helpful in ensuring the survival of the business and protecting creditors until more normal trading conditions can return and when the agreed turnover-based rent structure can occur.30.11.2020Mohsin and Zuber Issa, the billionaire brothers behind the British petrol retailing powerhouse EG Group, have launched a takeover bid for Caffe Nero, just hours before the chain seeks approval from landlords to cut its rent bill.A CVA is to be voted on this afternoon. However, it is unclear if Caffe Nero has responded to the EG offer yet and so what the offer terms are - could the bid force the coffee chain to postpone the vote?Update 13.11.2020Last night coffee chain, Caffe Nero put itself into a company voluntary arrangement.Founder, Gerry Ford, explained that this was due to the second lockdown which has caused the chain to suffer, from limits to socialising, less shoppers in town centres and workers being told to work from home.KPMG are working with the company on this insolvency procedure. The CVA needs to be backed by landlords and creditors to be successful.------------------------------------------------------------------------It is understood that high street coffee chain, Caffe Nero, is the latest to look into rent cuts from its landlords in order to allow itself to recover from COVID-19 which has caused devastation to the hospitality sector.KPMG has been appointed to help the chain assess its options which include mechanisms to cut rents and close stores. Could a CVA, known to help struggling businesses cut rents and close stores, be likely?Caffe Nero has 660 UK stores, with almost all of its outlets, minus 30, reopening since the coronavirus lockdown ended in June.Before Coronavirus hit, 135 million customers were served annually and the chain had around 5000 employees. As with others in the hospitality sector, the unprecedented virus and lockdown has had a massive impact.A source close to the company has said that exectuvies have been engaging in ‘’constructive dialogue’’ with landlords but needed talks to intensify as the company seeks to address its fixed cost base.Sky News report more.

UpdateIt has been reported that Aspinal's CVA has been approved which means that its10 standalone stores will close.--------------------------Aspinal of London, the leather goods and handbag brand, is heard to be seeking a Company Voluntary Arrangement.This type of restructuring could see some of its 10 standalone stores close. 300 employed staff have their jobs at risk.It was just in January that advisers, KPMG, were drafted in to assess the options possible for the company, with talks around a potential sale.When COVID-19 hit, the brand was impacted profoundly by the impact on consumer confidence and footfall, as chairman, Iain Burton said.Since the coronavirus lockdown, most of its stores have not reopened.‘’If approved, the CVA proposal provides Aspinal with a platform from which it can refocus its business on its core online and premium concessions channels, providing a solid and sustainable grounding for the future.’’Aspinal of London was founded in 2001 by Iain Burton. As well as its 10 standalone stores, it has concessions in Harrods and Selfridges. For the year to 31 March 2019, an 11% year-on-year increase in turnover was experienced. But losses before tax doubled to £4.4 million and operating losses rose to £4 million.

I recently read an article in The Caterer , indicating that Prezzo is doing the right thing regarding its CVA being approved by its creditors - Their losses have been halved.It left me thinking, what should directors do once a CVA has been approved?  Well, quite frankly, they should follow Prezzo's example.  Yes, Prezzo is a big chain of restaurants but, what the directors are doing, in reality, any director can do in some form or another.  So, what is it that is being done?  In my view there are 3 fundamental things:Change Change ChangeOk, that is a bit flippant but lets look at it more closely.After the CVA was agreed Prezzo changed the management team by appointing Executive Chairwoman, Karen Jones. In small businesses it may not be that easy to change in this way, but management really should consider changing their structure.  Perhaps responsiblities could change, maybe someone should be let go or even promoted? Change the strategy or focus on fundamentals. Karen Jones said the company was now focused on ensuring customers left wanting to return after a period where a “strategy of new openings and new concepts distracted from its mission of hospitality”.  In hindsight that seems so obvious, a returning customer is worth so much more as you do not have to spend loads of money to get them back. Change your financial controls. The company's directors will need advance notice of any problems and the rigour of the process means that they must have good management information.  Poor financial records is the principal reason that companies become insolvent.Investing in the future is the next big thing.  Finding new money to carry out change can be a challenge.  Debt for equity swaps can work in larger businesses where the lenders see an opportunity down the road. Debt relief can increase working capital by improving cashflow.  In smaller businesses, creditors like to see that directors and stakeholders are putting money in.  So, maybe sell some assets or try to raise other sources of finance.  Lenders will lend to companies in a CVA as long as they are happy that the changes mentioned above are happening and any forecast is realistic.If you want to know how we can help businesses then give us a call on  0800 970539

So, the next big CVA has been announced.The owner of Giraffe and Ed’s Easy Diner has announced that it will close a third of its restaurants.  It aims to close 27 of the eateries.  It is expected that hundreds of the jobs will be lostHundreds of jobs have been placed on the line at restaurant chains Giraffe and Ed's Easy Diner as bosses prepare to axe a third of branches.The business is owned by Boparan Restaurant Group (BRG) who bought the brands from Tesco in 2016.Tom Crowley, chief executive of BRG, said: "We have been examining options for the two brands for some time and the CVA is the only option to protect the company."The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face."BRG also owns the famous fish and chip restaurant Harry Ramsden.It its most recently available accounts, Giraffe and Ed's Diner, had annual turnover of £67.1 million.So the casual dining sector is still under pressure with Giraffe and Ed's Easy Diner joining the ever growing list of companies that are closing restaurantsPrezzo Carluccio Gourmet Burger Kitchen Byron Burgers Jamie's Italian GauchoMeanwhile Wagamama does very well!  Will landlords reject the CVAs?  Will they be outvoted again?