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Wed 16th Feb 2022 - Corbin & King fends off High Court challenge over debt repayment
Corbin & King fends off High Court challenge over debt repayment: Corbin & King has fought off a High Court challenge to a proposed £38mn rescue package. The FT reports that a subsidiary of Thai hotel operator Minor International – Corbin & King’s biggest shareholder – attempted to block the restaurant group from repaying a debt to the Thai company after Minor sought to call it in. Mr Justice Foxton said, however, he was “not persuaded” to grant the injunction and would set out his reasoning in a ruling later today. The judge’s decision comes after a bitter dispute between Corbin & King and Minor, which forced the group into administration in January. Minor had called on Corbin & King to repay almost £34m of loans within 24 hours. Fraser Campbell, the barrister representing MI Squared, a subsidiary of Minor, accused Corbin & King of trying to “disrupt an orderly administration” by pursuing a deal “with a body… that has been perfectly plain that it wishes to support them in the battle for the company”. Campbell said it was “entirely unclear… how this new transaction will actually have any effect on rescuing the companies or protecting the interests of creditors”. He added that Minor was “content” not to be repaid the debt. King said the landlords of the group’s restaurants could forfeit their leases if the moratorium were lifted. He said there was “no doubt in my mind or in the minds of the other C&K director that if the subsidiaries were – as Minor want – put into administration, this would be disastrous for all concerned”. Barrister Nigel Dougherty, representing King, Corbin and Zuleika Fennell, the group’s managing director, said the terms of Knighthead’s loan were “manifestly better than the terms on which [Minor] has extended its debt”. According to King’s statement, Knighthead offered to buy Corbin & King’s assets for £45m in February as well as offering a loan to refinance all debts including the sums owed to Minor, in order to avoid insolvency. Doherty said Knighthead had “confidence” in King and Corbin and was “prepared to work with them” in an effort to “move forward successfully”. Marion Walsh-Hédouin, a vice-president at Minor, said the judgment “resolves nothing”, with the restaurant group replacing one secured creditor with another. “As today’s evidence showed, Mr King accepts that Corbin & King is insolvent and in need of strong financial support to secure its future, something Minor International has always been prepared and repeatedly offered to provide,” she added. 

91 of 536 companies in next edition of Propel Turnover & Profits Blue Book generating pre-tax profit of more than £1m: A total of 91 of the 536 companies featured in the next edition of the Propel Turnover & Profits Blue Book are generating pre-tax profit of more than £1m. The Blue Book has begun to reflect the economic damage of the pandemic with 196 companies reporting a profit and 340 reporting losses. Premium subscribers will receive the latest edition of the Blue Book, which is produced in association with Mapal Group, on Friday (18 February). The 536 UK pub, restaurant, cafe and hotel operators featured have a total turnover of £26.7bn. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive two other databases – the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. Propel Premium subscribers will also be given access to the entire recording of The Restaurant Marketer & Innovator European Summit Conference this week. Subscribers will be sent 31 separate video presentations, featuring 67 speakers, at 9am on Thursday (17 February). Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Pret sales almost back to normal in London’s financial districts, as US sales begin to pick up: Sales through Pret A Manger stores are “almost back to normal” in London’s financial districts, according to Bloomberg’s Pret Index. The index found that in London’s City and Canary Wharf financial districts, efforts to restaff offices are much further ahead than in the US, which is reflected in Pret’s transactions being almost entirely back to normal in those areas. “With restrictions loosening across England, we’re seeing significantly more traffic around the country and in some places getting back to the level we saw before omicron,” Pret chief executive Pano Christou said. Pret’s sales close to the New York-based headquarters of financial firms including JPMorgan Chase, Goldman Sachs and Citigroup have risen in recent weeks to just under half of pre-pandemic levels—a sign that the areas are repopulating as banks begin recalling employees to the office. The figure is set to increase further in March, when companies including American Express and Wells Fargo intend to bring a greater number of workers back. Christou said: “Given that the US seems to be slightly behind the UK in evolving covid restrictions as omicron declines, I would not be surprised to see business pick up there over the next few weeks as people get back to the office more frequently.”

Insolvencies on the rise as pandemic protection ends: Corporate insolvencies in England and Wales began to return last month to levels last seen before the pandemic as more businesses failed over debts. The Times reports that the number of companies going bust reached 1,560, more than double the figure of a year ago and similar to that of January 2020, before the onset of covid-19. Businesses were protected from certain forms of creditor action during the pandemic, resulting in a significant drop in insolvency levels. The rises in the January levels were driven by greater levels of creditor voluntary liquidations, which were 34% higher than 2020. In a creditor voluntary liquidation, the directors of a distressed company volunteer to put their company into liquidation. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, the government’s Insolvency Service said. Claire Burden, a partner at Tilney Smith & Williamson, an accountancy and professional services group, said that distress was being caused by inflation, continued supply chain disruptions and raw material and commodity shortages, and she added that interest rate increases were expected to put more pressure on companies in future. Christina Fitzgerald, vice-president of R3, the insolvency trade body, said the figures showed “the toll the current business climate is taking on firms in England and Wales”.

Shrinking wages reignite calls to halt national insurance raid: The tightest squeeze on real wages in eight years has renewed demands from business leaders for ministers to reconsider the National Insurance raid planned for April. Regular pay packets shrank by 1.2% in real terms in the three months to December, according to the Office for National Statistics, an annual drop not seen since 2014, at the same time energy bills and petrol prices pushed inflation to its highest in three decades. A 1.25 percentage point increase in both employee and employer National Insurance – badged the Health and Social Care Levy – comes into force in April, the same month as the jump in the energy price cap is expected to force inflation up to a peak of 7.25%. Lord Bilimoria, chairman of Cobra Beer and president of the CBI, told The Telegraph, “if anything, taxes need to be cut, not increased”. He said: “Taxes are going to be at their highest level in seven decades. This is absolutely the wrong time to put up taxes at all. This is the time when we should be helping the economy and businesses to recover after all the pain we have been through over the last two years.” Business leaders under pressure are becoming increasingly vocal in their criticism of what they see as a high-tax government. Patrick Dardis, chief executive of Young’s, warned that “the rise in national insurance was ridiculous at the time, it now seems like utter madness”. He said it was “an awful decision when businesses and jobs and the economy and millions of ordinary folk are brought to their knees”.

AEW buys Cardiff nightclub freehold with Rekom as tenant: AEW UK REIT has bought the freehold of PRYZM Nightclub in Cardiff for £3,625,000 or £92 per square foot. The purchase price reflects a net initial yield of 8%, with an anticipated reversionary yield of circa 9%. The company stated: “The property is located in a strong pitch in Cardiff city centre, in close proximity to the Principality Stadium and St David’s Shopping Centre, and prominent within the leisure and late-night district. It provides 39,469 square foot of nightclub and bar accommodation. The property is single-let to a subsidiary of Rekom UK (formerly The Deltic Group), operating as ‘PRYZM’ and ‘Steinbeck & Shaw’, providing over 14 years unexpired term.” Alex Short, Portfolio Manager, AEW UK REIT, said: “We are pleased to have acquired the PRYZM Nightclub in Cardiff following the removal of covid restrictions in Wales permitting the reopening of leisure facilities. It has been purchased for a price that will deliver a strong initial yield which will be immediately accretive to shareholder returns, and the tenant is up to date with its rental commitments despite the disruption to trade caused by the pandemic. The property is well located and demand for leisure assets remains robust with a limited number of large capacity venues available. We are pleased to add this asset to the portfolio and will continue to target acquisitions where we believe values offer the opportunity to deliver both strong income and capital performance.”

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