Insolvency news round-up
Yes, the winter Job Support Scheme is waiting in the wings but it’s not going to save every job or company.
Some will decide to battle on throughout the winter regardless of the likelihood of success. Others will make hard decisions now in order to try and ward off the worst of the financial storm while some may decide that this is one crisis they are not equipped for and will make arrangements now to begin to close their companies in an orderly fashion.
We look at the fallers among this month’s runners and riders so far and all the other administration and insolvency stories you might have missed this October.
Pizza Hut CVA
Pizza Hut is the latest big-name to instigate a Company Voluntary Arrangement (CVA) with its creditors to protect its long term future in a fluid food environment.
Yum! Brands, who own the UK franchise along with KFC and Taco Bell, have agreed that as part of the deal they would close 29 sites immediately with the loss of 450 jobs.
This still leaves Pizza Hut with 215 locations and over 5000 jobs still in place.
A spokesperson said: “We are delighted to have reached such a constructive position in partnership with our landlords and creditors. We appreciate the support of everyone involved and this outcome provides us with a strong platform to secure the long-term future of the business.”
Pizza Hut joins Pizza Express, Ask Italian, Zizzi, Carluccio’s, Bella Italia, Cafe Rouge and Las Iguanas in seeking the protection from creditors actions and breathing space offered by a CVA.
The largest Cinema operator in the UK has announced that it’s temporarily closing all of its 127 UK sites as well as its 536 US based ones.
Mooky Greidinger, Cineworld chief executive, said: “This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets – including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.
“Cineworld will continue to monitor the situation closely and will communicate any future plans to resume operations in these markets at the appropriate time, when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen.”
Along with hospitality, the entertainment industry is suffering from the double hits of no big names to lure them through the doors and the new infection spikes indicating that the virus spreads more quickly indoors.
With 51% of entertainment, recreation and arts industry workers still on furlough, the forthcoming job support scheme will be of little benefit to the workers losing their positions as they are not able to remain employed in any capacity – part-time or full-time.
Administration for Polpo
The small-plate specialists will close their chic Venetian-inspired restaurants in Chelsea and Soho after being unable to return to profitability following a CVA last year.
The group celebrated its tenth anniversary in 2019 and closed three more branches in London and Brighton to concentrate on its core locations but sadly Covid-19 restrictions have choked off any hope of recovery for the group.
One of the best known English Language colleges in the country has appointed liquidators as Coronavirus restrictions meant that it was impossible for MLS International to continue trading.
The Bournemouth-based campus welcomed around 2,000 pupils a year from 40 countries at its peak but the enforced closure of educational institutions in March along with uncertainty around the legality of being able to provide certain specialist training online meant that they ceased to generate any revenue since April.
The travel restrictions from various countries proved to be the final, insurmountable obstacle as a large proportion of their students would come from the aviation industry.
A spokesperson said: “It’s sad to see a company like MLS fail as it’s a college that has long-established training traditions and is well known in Bournemouth, it’s hometown, abroad and in the industry.
“The pandemic has severely impacted this business which has until this year been profitable. Unfortunately, the reduction in international air travel, uncertainty as to its return and no guarantee that overseas students would want to travel to the UK to learn English in sufficient numbers for the business to be profitable, the directors had to make the difficult decision to cease trading and enter liquidation to prevent the position worsening for creditors.”
Upmarket Italian eatery Gusto Italian has entered a CVA to secure its immediate future.
Its landlords and other creditors agreed a deal to keep the majority of its sites open but four will close along with 105 jobs that could not be redeployed to other locations.
Chief Executive Matt Snell said: “The last six months have been the most challenging in the history of our business and the wider sector. The passing of the CVA is an important milestone, securing the future of the Gusto business and protecting more than 600 jobs.”
The famous company that secured the offer of millions of pounds from the Department of Transport despite not having any ships in its fleet has entered voluntary liquidation.
Seabourne Freight owes creditors including HMRC over £2 million but only had £39,120 in assets to repay them.
The company was awarded a £13.8 million contract in 2019 to ship food and medicine between Ramsgate and Ostend in Belgium to relieve Dover’s port in case of a no-deal Brexit but this was later rescinded when it was revealed that Seabourne didn’t have any fleet to make the sailings.
With a quarter of the country under various local lockdowns with no sign of respite and a new traffic-light system due to be unveiled with even harsher restrictions attached, 2020 is still going out of its way to beat everybody into submission.
Every time it looks like there’s some good economic news, three pieces of bad news come along to pile on top of it. Spring 2021 might be five months away but it sometimes feels like five years.
If it’s hard to make forecasts for the immediate future now – how can we accurately predict what’s going to happen beyond the rest of the year with any certainty?
One thing we can say with a degree of certainty is that our expert advisors are always available to speak to you once you get in touch with us.
They’ll arrange your free virtual initial consultation whenever you want to help you focus on your immediate challenges and what you can do to meet and beat them.
We can help you set out an action plan to tackle your longer term issues too but the most important thing to do is to make the decision early to speak to a Business Rescue Expert and see what they’ve got to say.