Asian Health Food Chain Hit By Pandemic

The Challenge

A London-based company with six healthy Asian food outlets and a central production kitchen faced severe financial difficulties. The COVID-19 pandemic and subsequent government-mandated lockdowns forced the business to pause trading. This lack of revenue led to significant creditor liabilities, including substantial rent arrears for its premises. The company needed a solution to address its debts and keep the business from going under.

The Solution

The company contacted RMT, who worked with the director and its creditors to develop a Company Voluntary Arrangement (CVA). The agreement stipulated that the secondary preferential creditor (HMRC), would be repaid 100p for every £1 owed, while remaining unsecured creditors would receive a minimum of 32p for every £1 owed, over a five-year period. This plan is expected to repay at least £310,000 to creditors. A key part of the solution also involved careful and protracted negotiations with landlords to secure a temporary, turnover-based rent agreement, which would later revert to pre-COVID levels.

The Results

The CVA was successfully approved by creditors in August 2021. The successful CVA approval prevented the company from entering liquidation or administration, saving 16 jobs and giving the business a chance to recover to pre-pandemic trading levels and continue its growth.