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Negotiating With Landlords To Save Chain of Restaurants

Our client operates 6 speciality food outlets in and around the City of London.  In addition, it has a central kitchen facility in East London serving the outlets. The abrupt closure of the business in the middle of March 2020 due to the COVID pandemic obviously was a huge and unexpected shock to the business. Despite some government measures and assistance, the losses on account of the complete lockdown were substantial. All 6 sites and the central production unit remained closed until the summer.

In July 2020, with the relaxing of lockdown, the company carefully tried to open some sites, but the business was impacted by the ongoing government guidance to work from home. Only a fraction of the company’s regular customers was present in the City of London where the sites were located. As a result, the company’s turnover was heavily reduced, compared to pre-COVID times. This ranged between 15-20% of 2019 turnover in the sites which were able to be opened.

The company had sales of 3.5m pre pandemic.  As at December 2020 The landlord was owed £349k in rent.  The directors themselves had put in £650k of loans over the years.

KSA group advised that the company should propose a Company voluntary arrangement that would allow it to do a deal on the outstanding rent and HMRC arrears.

KSA approached the landlords and negotiated with each of the outlets landlords for rent going forward.  These were to be rents based on turnover for a period of 6 months until trading returned to normal.  The arrears of rent were bound by the CVA and the unsecured creditors ( landlords ) received 32p in the £1.  The CVA allows for additional payments if the turnover and profitability increase.

Part 2

Following on from the trend to continue working from home in 2022 the outlets did not manage to get trading up to the levels necessary to move off the turnover rents.  As such KSA group negotiated another 6 months extension until October 2022.  Now with the cost-of-living crisis we are seeking another extension.  So far, a number of the landlords have agreed.

KSA Group has considerable experience in negotiating with Landlords for the benefit of our clients.

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