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Wed 27th Dec 2017 - Update: Hotcha administration latest, The Ivy, Wagamama, Bloc Hotels
Hotcha’s secured creditor facing £7.4m shortfall due to VAT refund overpayment and overdrawn director loan agreement: The secured creditor of Chinese takeaway franchise Hotcha faces receiving less than £60,000 of the £7.5m it is owed due to a VAT refund overpayment and a director’s loan account being overdrawn by £4m, a new document has revealed. The report by administrators Simon Thomas, Arron Kendall and Steven Sartin, of Moorfields, showed the shortfall to GLAS Trust Corporation was estimated at £7,423,297. This was due to an overpayment of a VAT refund that subsequently led to HM Revenue & Customs (HMRC) raiding Hotcha’s head office and some of its retail sites in October. Investigations for VAT fraud and money laundering activities are “ongoing” at this time and the amount has not been disclosed. The report also showed the last management accounts indicated director James Liang's director loan account had an overdrawn balance of £4,080,084. The administrators said they were in correspondence with solicitors acting for Liang and had requested settlement proposals. The report showed as of 30 June 2017, Hotcha had a net loss after tax of £1,119,000 on turnover of £3,951,000. For the nine months ending December 2016, the company reported as loss of £578,000 on turnover of £4,482,000. The report stated no acceptable offers for the company as a whole were made. Offers for four of the leasehold premises on an individual basis and a separate offer for the kitchen and office equipment as well as the remaining sites have been subsequently made and accepted. As the deals were still to be completed at the time of the report, no details have been released. The only preferential creditors are the 145 employees that were made redundant at the time of the administrators being appointed in October. Claims are presently estimated at £130,000 and it is anticipated there will be a distribution. The report said unsecured creditors claims are expected to total between £600,000 and £700,000, although there was unlikely to be a return. The report showed the GLAS Trust Corporation loan had supported Hotcha’s expansion from nine to 18 sites along the M4 corridor as well as a headquarters and central kitchen in Bristol. All food was prepared in the kitchen and then sent to the takeaways to save costs. The report stated: “Hotcha suffered heavy losses caused by declining turnover and the costs of its aggressive expansion strategy and these had resulted in cash flow difficulties. HMRC carried out a raid at Hotcha’s head office and several retail sites in October and investigations for VAT fraud and money laundering activities are ongoing at this time. At this point, the company could no longer trade and the directors took insolvency advice, which resulted in the administrators being appointed and all 145 employees being made redundant.”

Soho building home to Ivy Brasserie sells for £190m: Great Portland Estates has sold a property in Soho, west London, which is home to an Ivy Brasserie, restaurant for £190m. The company said it had exchanged contracts to sell 30 Broadwick Street to a client of Savills. The headline price of £190m, equating to £186m after deductions for tenant incentives, was marginally ahead of the September 2017 book value, reflecting a headline net initial yield of 4.0% and a capital value of £2,015 per square foot. The eight-storey building, completed in late 2016, provides a total of 94,300 square feet of grade A office, retail and restaurant accommodation. The building is fully let, with the office tenants on rents ranging from £86.50 to £110 per square foot. The retail tenants include Nespresso, Estee Lauder Cosmetics (trading as Bobbi Brown) and Ovo, with the restaurant let to The Ivy Brasserie. The total contracted rental income is £8.15m per annum and current weighted unexpired lease term is approximately ten years (to the earlier of expiries or breaks). Great Portland Estates investment director Robin Matthews said: "The sale of 30 Broadwick Street is the final achievement in an outstanding development project for Great Portland Estates. The property is now 100% let and the sale continues our strategy of recycling capital out of mature assets.”

Wagamama apologises after restaurant manager threatens staff with disciplinary action for calling in sick: Wagamama has apologised after a manager warned workers they face disciplinary action for calling in sick over the Christmas period. A note on a rota at its restaurant in North Finchley in London said it was the responsibility of ill staff to find colleagues to cover shifts. Wagamama, which is owned by private equity firm Duke Street Capital, said the manager "feared team member shortages" and "regrettably decided to take this highly unusual approach", which was not company policy. A note beneath the rota stated: "No calling in sick! May I remind you if you are unable to come in for your shift it is your responsibility (underlined) to find someone to cover your shift (as per contract and handbook). Calling in sick during the next two weeks will result in disciplinary action being taken." A Wagamama spokesman said: “Following reports of a notice posted in our North Finchley restaurant we can confirm this was an isolated incident and is strictly not company employment policy. As a company we treat all our team with the greatest respect and understand and appreciate the hard work they all do. We sincerely apologise for what has happened."

Bloc Hotels reports turnover and profit boost: Birmingham-based hotel group Bloc, which operates sites at Gatwick airport and Birmingham, has reported turnover increased to £8,140,303 for the year ending 31 March 2017 compared with £6,432,211 the year before. Pre-tax profit was up to £327,509 compared with £114,606 the previous year, according to accounts filed at Companies House. A report by the directors accompanying the accounts stated: “The group completed a refinancing during the year, providing extra leverage to Bloc St. Pauls Birmingham of £1.36m and to Bloc Gatwick of £4.08m. These funds enabled the repayment of shareholder loans and the purchase of the Grand Central property, which cost the group £23m. As part of the refinancing, the Gatwick and Birmingham properties were valued by independent valuers with valuations of £22.5m for Bloc Gatwick and £6.7m for Bloc St Pauls Birmingham. The result of these valuations was a gain of £1m for Bloc Gatwick and a loss of £0.4m for Bloc St Pauls Birmingham compared with the comparative year valuations. Turnover at the Bloc Gatwick hotel has increased by 21.5% for the year under review. Occupancy has increased by 6.9%, average daily room rate has increased by 13.8% and revpar has increased by 21.6%. On 30 September 2016, the group completed an extension to the Birmingham St Pauls hotel, adding 33 new apartment-style rooms and expanding the Bloc offering from its traditional Vista and Sleep rooms. Turnover has increased by 32.7% for the year under review. Occupancy has decreased by 7%, as the directors expect the new rooms will take time to mature, average daily room rate has increased by 17.9% and revpar has increased by 9.6%. On 31 March 2017, the group completed on the purchase of the Grand Central site in Birmingham and had received planning permission for a new hotel development. The directors intend to start construction of the new hotel during the next financial year.”

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