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Wed 25th Sep 2019 - Abokado enters into CVA, online banking fraud investigation ongoing
Abokado enters into CVA, online banking fraud investigation ongoing: Abokado, the London-based healthy eating chain, has entered into a company voluntary arrangement (CVA) with the support of 99% of its creditors. The company revealed its intention to seek the CVA earlier this month after experiencing trading pressures and an online banking fraud that adversely affected working capital, the latter of which remains under investigation by the relevant authorities. Abokado’s directors sought the advice of RSM and concluded the best possible outcome for all parties was to restructure the business by way of a CVA. Abokado said the majority of the estate would continue to trade normally and there would be no immediate store closures. Chief executive Mark Lilley said: “Our CVA was voted through by an overwhelming majority. I’d like to thank all our stakeholders for their support. The CVA was vital to protect our strong and profitable core business. I’ve been immensely proud of how my management team and the Abokado family as a whole have handled themselves during what has been a difficult period. I know we’re all looking forward to getting back to doing what we love – focusing on our customers and investing in and growing the Abokado brand.” The company stated at the time it was seeking the CVA: “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.”
  

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