More High Street restructurings
1 October 2020: Cote Brasserie is the latest name on the High Street to undertake a formal insolvency process in order to restructure its operations. The chain of restaurants was acquired by new investors via a pre-pack administration, securing the future of 94 restaurants and 3,148 jobs. Only three outlets operating under the group’s other brands will close. A pre-pack administration is an insolvency process whereby the marketing of the business takes place and a sale is agreed prior to the company being placed into administration, with the appointed administrator(s) effecting the sale immediately upon or shortly after their appointment.
News of the pre-pack of Cote Brasserie came on the same day that the creditors of Pizza Hut voted to approve a company voluntary arrangement (CVA) which involved the closure of 29 of its 244 sites with the loss of up to 450 jobs, but 5,000 will be saved. Reports say that the CVA was a last resort to reduce annual rent obligations which Pizza Hut could no longer afford in light of rising costs and the Covid-19 pandemic. CVAs have been very much in the headlines in recent months due to a significant number of well-known High Street chains using them, in the main, to reduce rent obligations as a way of saving costs. Whilst this is one use of the process, CVAs can present a creative opportunity to restructure a company’s operations to the satisfaction of all parties and whilst, as you would expect, the high profile names are the ones which make the national press, CVAs can be an incredibly effective tool to preserve business and jobs.
The hospitality, pub and restaurant industry faces an incredibly uncertain future with recent reports of some 900,000 jobs being at risk. The 10pm curfew applied nationwide plus strict local lockdowns just announced in the North East, with London also in the crosshairs and even a further national lockdown being mooted, will do nothing to alleviate the concern. Some, but certainly not all, of the well-known names to undertake an insolvency process are Carluccio’s, The Restaurant Group, Casual Dining Group, Pizza Express, Azzurri Group, Yo Sushi and Byron. It will not be a surprise if a few more names appear on this list in the coming months.
Please contact any of the BRI management team if you have any queries in relation to this article or would like to discuss any insolvency concerns.