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Mon 9th Sep 2019 - Abokado launches CVA after sharp reduction in sales and ‘sophisticated’ banking fraud
Abokado launches CVA after sharp reduction in sales and ‘sophisticated’ banking fraud: Abokado, the London-based healthy eating chain, has launched a company voluntary arrangement (CVA) after seeing a sharp reduction in sales and being the victim of a “sophisticated” banking fraud. The company stated: “The challenges facing the restaurant sector are well documented including raw material and labour cost pressures, property cost increases, intense competition as well as the impact of weakening consumer confidence. The directors implemented numerous measures across 2016 and 2017 to mitigate these, resulting in the company delivering record profits during the year to March 2018. Abokado continued to perform well in the year to 31 March 2019, with like-for-like sales up 3% for the year as a whole. However, the company experienced a softening in sales from autumn 2018 onwards. This adverse sales trend accelerated through 2019, driven by a sharp reduction in sales volumes. Furthermore, in July the business suffered a significant sophisticated online banking fraud, which materially impacted working capital and compounded the trading issues. The fraud is subject to investigation by the relevant authorities but the directors consider it unlikely there will be any recovery. The directors have undertaken a number of measures across 2019 to improve performance against the prevailing headwinds, comprising further cost reduction and margin improvement plans. While the core Abokado estate continues to trade well, a number of underperforming sites threaten the survival of the whole business. The proposed CVA is designed to mitigate and/or remove these factors to underpin the short, medium and long-term viability of Abokado providing the best outcome for our creditors, suppliers, customers and employees. The directors wholeheartedly recommend all stakeholders vote in its favour.” Chief executive Mark Lilley added: “Over the past three years my team have proactively addressed the market conditions and we considered Abokado was in a good position. The market dynamics during 2019 were unanticipated and their impact has been further compounded by the recent fraud. The proposed CVA will put Abokado in the best possible position to move forward in an uncertain environment. It will allow my excellent management team to continue pursuing our vision of bringing freshly made, Pacific-inspired food to more people.” Abokado said it would make no further comment at this time.

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