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Mon 26th Oct 2020 - Exclusive – Iberica undergoes CVA as rent levels take toll on business
Exclusive – Iberica undergoes CVA as rent levels take toll on business: Spanish restaurant group Iberica has undergone a company voluntary arrangement (CVA) with rent levels taking their toll on the business, Propel has learned. The process, which was overseen by RSM and Shoosmiths and saved 135 jobs, was undertaken following negotiations with creditors – 99.1% of all creditors voted in favour, including 100% of landlords. As part of the restructure, Iberica has closed its site in Glasgow while its restaurant in Manchester will also shut. It leaves the business with four sites in London and one in Leeds. A key factor in the CVA negotiations involved the introduction of a flexible rent period whereby landlords will offer a rental concession up until the end of July 2021. During this period, sites will concede quarterly rent in arrears amounting to 10% of their ongoing revenue. Chief executive Marcos Fernandez Pardo said: “The actions of the government in the March lock-down did not take into account the contractual implications with leases for hospitality operators, effectively placing all of us in a situation where we have had to negotiate with multiple creditors, especially landlords in a position of absolute vulnerability. This could not be solved by effective strategies to counter the problems caused in the P&L, with cost control and new revenue streams, as our contracts created massive debt from one day to another with all our landlords. We focused on controlling all variable costs and creating new revenue channels for our customers in their homes. Our restaurants are large, have tall ceilings, ample and high ventilation systems so we could adapt without changing our atmosphere and provide an extra secure space, which is what would make our strategies sustainable during these volatile periods. With this, a formal business plan and business plan brochure could be created, proposing this as the investment opportunity to our creditors. Sadly, the impending effects made us make the tough decision of closing our Glasgow site, which was showing promising growth before it closed. Manchester will also be closed because, although it made the same revenue as our Leeds restaurants, its rents were double. Both restaurants presented too much of a risk for the rest of the group. Our process allowed an open and transparent conversation with all our creditors. It also allowed our bank to support the action and provide the cash flow it needed. We are thankful all our landlords, Santander and our creditors entered the process with a clear understanding that our fates were intertwined and we all provided the firm the necessary flexibility to sustain this period of uncertainty, protecting the interests of all stakeholders. Having achieved this viability, the government’s actions again place us in a position where the company will not die financially, but will lose staff. By placing restaurants in central London in tier two or three, it closes them in everything but name.”

Rule of six and curfews likely to have ‘zero effect’ on reducing contacts: The ‘rule of six’ and 10pm curfew are likely to have had ‘zero effect’ in reducing contacts, the first scientific study of the policies suggests. The Telegraph reports that researchers at the London School for Hygiene and Tropical Medicine (LSHTM) surveyed thousands of people to find out if they had met fewer people since the new rules were implemented. For the ‘rule of six’, nearly one third said they had fewer contacts, while 26% said they had seen more people. However, the majority of participants saw the same number of people, and there was no change in the overall mean number of contacts for the whole group between the two time periods. Likewise, for the 10pm curfew, researchers found ‘near identical’ numbers of people had increased and decreased their contacts since it was implemented. Local restrictions were also found to have made little difference to the number of contacts, with just seven fewer contacts for every ten people, or less than one each. In contrast, the full national lock-down in March reduced the average daily contacts from about 10.8 to 2.8. The government’s Scientific Advisory Group for Emergencies (Sage) is believed to have advised against implementing the 10pm curfew, and the new study was co-authored by Prof John Edmunds, a prominent member of Sage.

Tampopo closes Manchester Piccadilly site: Tampopo has closed its Manchester Piccadilly site. Co-founder David Fox said on Twitter: “I had approached the landlord (L&G Pension Fund) to see if they would consider a turnover based rent to allow us to trade during this period. This was rejected with no alternative offer suggested. They are seeking full payment of rent and service charge, including for the period we were closed. In my opinion, for a landlord with less than 8% of its portfolio in city centre retail and leisure this is neither fair nor reasonable. This has left me with no option but to close the site. The most recent government support package will hopefully enable me to retain most of my team which is a massive relief. Recent moves including talk of how ridiculous the 10pm curfew is and that working meals are completely acceptable are little glimmers of hope for improved sales across the rest of the Tampopo sites.”

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