Caffe Nero secures approval for CVA plans: Caffe Nero, the Gerry Ford-founded chain, has had its company voluntary arrangement (CVA) approved – but the proposal could yet face a legal challenge. In excess of 90% of creditors voted in favour of the proposal, which included a modification that the company will ensure compromised creditors (including landlords) will have their arrears paid in full in the event that a sale of the group to the third party occurs within the next six months. The company said: “Importantly, the proposal received the support of an overwhelming majority of landlords. The directors are extremely grateful to its landlords, business partners, suppliers and other creditors for their support and understanding in the process during these challenging times. After the devastating effect caused by the pandemic on Caffe Nero, the approval of this CVA by the company’s creditors safeguards the immediate future of the business and provides a sustainable platform from which the company can navigate the challenges ahead and rebuild sales momentum over the medium to longer term.” Under Nero Holdings’ CVA proposal, a number of Caffe Nero-branded sites could eventually close, although the focus of the plan is to switch to a turnover-based rent model. But the billionaire brothers Mohsin and Zuber Issa, who have had a bid for Caffe Nero rejected, warned the coffee shop company its proposed restructuring will face a legal challenge. Sky News reported lawyers for EG Group, the petrol retailing company headed by the Issas, have written to Caffe Nero’s parent company to highlight the likelihood of a landlord rebellion against the CVA. Under the CVA, which is being conducted by KPMG, landlords face losing the majority of the rent arrears they are owed, while EG is promising to pay them in full – a sum understood to be worth tens of millions of pounds. Under insolvency law, creditors can challenge the result of such a restructuring plan within 28 days, and sources among Caffe Nero’s landlord base said there was certain to be an appeal. As well as its Caffe Nero business, the company also operates 150 stores brands Coffee#1 and Harris + Hoole, which are not part of the CVA.
Leon sets out restructuring plan: Natural fast food brand Leon has set out its restructuring plan, which includes a multimillion-pound investment from shareholders to secure its future. Sky News reports details of the group’s company voluntary arrangement (CVA) proposals have been circulated to landlords and lenders on Tuesday, and would see four of Leon’s restaurants switch to a rent-free model. The majority of its 60 outlets will switch to turnover-based rents. It also stipulates the CVA will be in place for two years, unlike many three-year restructurings drawn up by rivals. As part of the restructuring, Leon’s shareholders will inject £3m into the company if its cash reserves fall below £2.25m for more than 28 consecutive days. John Vincent, Leon co-founder and chief executive, said: “In common with the whole hospitality sector, the past nine months have been the most difficult in Leon’s 16-year history. We started the year as a profitable and growing business but the effects of the repeated lockdowns and tier restrictions have made our current business model untenable. We have also engaged extensively with the vast majority of our landlords across the past few months.” He said the company had “a duty to secure Leon’s future for the benefit of all our stakeholders and, after careful reflection, believe this CVA is the best way of doing that”. He added: “It will give the business the breathing space it needs before it can fully resume normal trading and look to grow again.” Leon appointed consultancy firm Quantuma in early June to help it engage with its landlords and push to change to a turnover-based rent model.