Owner of the above restaurant chains, Tragus Group, is considering company voluntary arrangements (CVAs) for the business in order to restructure the chains and ensure they are on a stable financial footing.
Together with high rent costs and business rates, consumers are continuing to watch their spending and many restaurants are feeling the pinch as a result. The Group wants to focus on restructuring rent commitments and possibly selling the Strada chain which has been recently struggling. The Group’s current debt burden of £235 million has been a growing problem for a number of years, ever since the business began to rapidly expand in 2006/2007.
While plans are still underway, a restructure may happen without a formal CVA in place and informal negotiations with landlords may be the best solution for the business.
A CVA can be a powerful method for companies to reorganise debt, keep control of the business and protect themselves against aggressive creditors and legal actions. In this case, a number of CVAs will help release the Group from expensive leases, leading to possible restaurant closures. This will in turn free up money for the business and debt can be paid off over time.
The restaurant chain, La Tasca, went into a CVA back in 2012 and is continuing to trade well.
Peter Saville, Alastair Beveridge and Catherine Wiiliamson of Zolfo Cooper have been appointed as Nominees to assist with Tragus Group’s CVA proposals. Saville commented, “We are very pleased to be working with Tragus on this major project to create a more efficient business, which will preserve jobs while repositioning the business for growth. We are optimistic that creditors will accept the proposals set out, which have been designed to provide the best outcome for all stakeholders.”
If the CVA is approved by creditors, 125 Café Rouge stores and 90 Bella Italia stores will be involved. Depending on talks with landlords and the results of the restructure, it’s difficult to tell how the Group’s 7,000 employees will be affected.