TheBusinessDesk.com has reported that Pizza Hut has gone into administration less than a year after a rescue plan.
FTI has been appointed as administrators by DC London Pie Ltd, the business established to manage Pizza Hut UK following a pre-pack agreement. Six weeks after HMRC filed a winding-up petition against the company, the action was taken.
Yum! III (UK) Limited, the applicant for today’s filing, is a division of Yum! Brands, Inc., an American food outlet operator based in Louisville, Kentucky, which is in control of the company.
Last year, 3,000 jobs were spared when Directional Capital, which controlled franchises in Sweden and Denmark, purchased the 139 restaurants in a pre-pack deal.
Investor Pricoa Capital, which had supported a management buyout, was owed over £40 million when Pizza Hut UK’s former owner, Heart with Smart Limited, went bust.
Pizza Hut is to close 68 restaurants and 11 delivery sites with the loss of 1,210 jobs after falling into administration.
However, Pizza Hut’s global owner Yum! Brands has agreed to save 64 restaurants in the UK, preserving 1,276 jobs.
Here is a quick guide to the legal realities of the administration process.
The Process: Administration is a legal “moratorium” that protects insolvent companies from creditor action. Licensed Insolvency Practitioners take control to either rescue the business or sell its assets to achieve a better result than immediate closure.
Who gets paid? There is a strict legal queue. Secured lenders (banks) and “preferential” creditors (employees and HMRC) are paid first. Unsecured creditors, including trade suppliers and customers, are at the back of the line and often receive nothing.
Employees: Redundancies often occur in the first 14 days. After this window, the administrator “adopts” remaining contracts, making ongoing wages a priority. Unpaid redundancy or notice pay can usually be claimed through the government’s Redundancy Payments Service.
Suppliers & Customers: Suppliers should negotiate “pro-forma” (upfront) terms for any new orders. For customers, gift cards and deposits are rarely honored. However, if you paid over £100 via credit card, you may be able to claim a refund under Section 75.
Watch the Video That Explains Employee Rights
Written ByRobert Moore
Marketing Manager
Rob has over two decades of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at RMT to develop strategic marketing programmes to support the business plan and drive more company rescues.
