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Wed 22nd Jul 2020 - Chilango to appoint administrators
Chilango to appoint administrators: Mexican restaurant brand Chilango has said it intends to file a notice to appoint administrators. The company, which underwent a company voluntary arrangement (CVA) in January, has written to investors ahead of the move. Chilango stated: “During this period we have done our very best to mitigate the pandemic’s impact, operating as much as is safely possible while implementing the various government support measures available. Unfortunately, these efforts have not been sufficient to secure the future of our business. As a result of the coronavirus pandemic, Chilango will give notice of its intention to appoint administrators to the company in the coming days. Our restructuring adviser, RSM, will launch a sales process of the business as we pursue the best possible outcome for the business, our employees and creditors. While the founders of the company, Eric Partaker and Dan Houghton, won’t purchase the company out of administration, the opportunity to do so will be open to any interested party via a bidding process. This isn’t the situation we had hoped to be in after our investors approved our CVA in January. It is all the more frustrating given the positive trading before lock-down. Prior to the pandemic, Chilango’s positive like-for-like sales growth continued and the company was on track to deliver a budgeted group Ebitda of more than £800,000. Although the vast majority of bondholders, following the CVA, chose to preserve their principal investment and rate of return in a new preference share class, we took the decision to pause this conversion. This was to ensure the position of bondholders wasn’t changed or worsened by any steps that might need to be taken, pending the discussions now under way to secure the business’ future. It is with a heavy heart we share this news with you and we’ll provide more information when we have more clarity on the future of the business.” Chilango, which operates 12 sites, primarily in London, underwent the CVA in January as part of the company’s plans to get a grip on its finances and £6.9m debt pile. Bondholders in Chilango were offered the choice to transfer their investment into shares in the company or cash out at a rate of 10p in the pound. About 1,500 people became bondholders in the business via mini-bond offerings in 2014 and 2019, which raised more than £5.8m with a promise of 8% returns. In September 2019, Partaker and Houghton, acting as directors, decided to make their co-chief executive roles redundant, while Richard Franks was promoted to managing director in February. Partaker and Houghton both remain as non-executive directors and major shareholders in the business.


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