The pub group, Punch Taverns, have been in the news quite a bit recently after the much-awaited decision to restructure the group is revealed this month, while the Group’s future hangs in the balance.
Punch Taverns have been in talks for the last 14 months with its lenders over a proposed restructuring program to combat £4.3 billion of debt. 4,000 pubs are expected to be affected by the move, with pub landlords now at their wits end, unable to be a part of the decision later this month.
The Group has effectively been a zombie company for the last three years, unable to move forward. If there is any chance for the company to become sustainable, something needs to be done sooner rather than later.
Tenants of the pubs operated by Punch, will be hit the hardest, especially if the Group goes into administrative receivership. Costly security deposits they have paid to Punch will likely be lost and many aspiring landlords will lose their livelihood. Tenants want more of a say but can only wait for the lenders’ decision on 14th February. With talks of a campaign group to reach creditors directly, the small pub tenants and landlords want to be heard and have a say in Punch’s future.
A Punch Taverns’ spokesperson said, ‘An end to uncertainty is critical for Punch Taverns and its tenants. The restructuring outcome rests with city institutions whose decisions are being watched very carefully. We are doing everything we can to avoid default. But, in the event it happens, we would hope an administrative receiver would recognise the importance of the tenants to the future of the business and act in their interests.’
In the event of insolvency, an administrative receiver is appointed if the company has secured debts held before 2003.
If less than 75% of lenders turn down the proposals, it is likely the group will go into administration.
In the past, Punch Taverns operated over 10,000 pubs and expanded the business to perhaps an unmanageable level. The credit crunch was a huge wake up call to Punch, however, by then it was effectively too late and the business’s debt started to spiral out of control. Like so many other retail and leisure businesses, many have suffered over the last few years due to customers spending habits (or, indeed, lack of) as there is more of a need to save, not spend in the recent tough economic climate.