USA singer and actress Jessica Simpson promoted Pizza Hut
ICSM Credit News: pizza chain to serve up an oven baked CVA; 200,000 cars for sale at £800 each as Hertz struggles; banana firm slips up; builder goes bust; and cold comfort for creditors from Hotter Shoes
More news from ICSM Credit on liquidations, CVAs and creditors chasing payment.
Pizza Hut plans on a CVA
Another day another big name struggles to survive in the casual dining industry. Pizza Hut hopes creditors will accept a company voluntary arrangement (CVA) so it can restructure its finances and close 75 outlets and sack hundreds of staff.
“This is the new normal,” said Ian Carrotte of ICSM Credit, “As firms look to come out of shut-down they find their profitability at near zero and the only realistic way forward is to downsize and come to an arrangement with creditors. The idea is to avoid liquidation but can put creditors in a difficult position. Do they write off some of the money they’re owed and hope they can recoup the cash with the restructured company or do they refuse to accept the CVA and lose everything if the firm goes bust?”
Pizza Hut has hired advisers, Alvarez & Marsal, to explore the possibility of a CVA while one of their rivals Pizza Express are in a similar situation in seeking a CVA. They are not the only ones in the sector who’ve hit a brick wall of historic debt and the Covid 19 shut down. The Casual Dining Group, who owns Café Rouge, the Azzurri Group, who control Bella Italia and Carluccio’s have already fallen into administration. Byron, Prezzo and Itsu are also looking at restructuring. Pizza Express, the biggest rival of Pizza Hut, is said to be preparing for the closure of 75 outlets under a proposed CVA.
One solution: flog your assets
One of the world’s largest car rental firms is trying to stave off collapse by selling off thousands of its cars. Hertz has taken a hit from the coronavirus pandemic after a significant portion of its business evaporated nearly overnight as the holiday and business travel industries dried up. In an attempt to save the company Hertz are to sell nearly 200,000 vehicles to raise funds for their creditors at just £800 a car to raise more than half a billion pounds. Commentators within the industry said the sale would add to a glut of used cars in the market with the coming recession adding to a huge slowdown in new car sales.
Ian Carrotte said for businesses who have survived the Covid 19 crisis or for new start-ups that needed a car then this was a good time to pick up a bargain. “It’s about the only bright spot in a pretty dark chapter in business,” he said, “but whenever there is a down turn in the economy there are always opportunities and depressions are ironically a good time to start a business as if it works then it will do well when things pick up.”
Yes, we have no bananas
Essex based Winfresh UK Limited has entered into administration after 26 years in business. They have appointed Michael Lennon, Sarah Bell and Philip Dakin of Duff & Phelps as joint administrators to the business. Lennon said: "In recent years, the UK banana market has become highly competitive and that has impacted the company in terms of volume and pricing. As a result, the financial position of the company has become untenable and mounting cash flow pressures have resulted in the appointment of the joint administrators."
Business Sale Report said: “Winfresh UK is one of the country's leading suppliers of bananas, including Fairtrade bananas, sourced from thousands of smallholders in the Caribbean. All of these bananas are sourced with the help of parent company Winfresh Ltd, which has a registered office in St Lucia.”
Building firm collapses
Business Sale Report have noted that the Warrington-based construction firm Cruden Construction is set to go into administration. Founded 50 uears ago the firm based in Grappenhall in Warrington, was first founded as Skarne Ltd in 1964, but the firm was renamed and rebranded in 1976.
Business Sale said: “The well-established company has announced that it has filed a notice of intent to appoint an administrator just one month after it was awarded a £19 million contract to construct a care home in Southport. Cruden was also among 30 contractors to be appointed to Great Places Housing Group's £750 million Innovation Chain North framework, which aims to deliver affordable and social housing projects across the area. The news comes after the company reported an operating loss of £2.3 million for the financial year ending September 2018, despite turning over more than £38 million. Like many other construction company's, Cruden saw a number of its construction sites closed at the start of April due to a lack of availability of materials following the coronavirus lockdown.
ICSM credit understands that KPMG are overseeing the administration process.
Shoe firm’s CVA given green light
The Retail Gazette have reported that a CVA negotiated by the retailer Hotter Shoes has been approved by creditors. Hotter Shoes will close 45 of their shops and hundreds of jobs will go as a result. One of the biggest losers will be the various landlords who will take a haircut with substantial reductions to rental repayments.
Drapers reported Hotter’s chief executive Ian Watson as saying: “Following the impact of Covid-19, the CVA was an unfortunate but necessary step to avoid the likelihood of Hotter going into administration, causing a much larger number of job losses, and was critical to ensure a viable future for the business.”
Ian Carrotte said the Hotter Shoes’ CVA has followed something of a template for firms emerging from lock down. “These firms may survive in a small form,” he said, “which on one level is good, but there is a price. Many people lose their jobs often without redundancy pay, landlords lose rent and suppliers are not paid in full and sometimes not at all. They are often told that they can trade with the reformed firm so can claw back some of their losses. It is not an ideal situation for anyone but better than liquidation.”
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk