City centre burger restaurants under threat in CVA
Two Manchester outlets of burger chain Byron are under threat as it plans to close up to 20 restaurants as part of a financial rescue under a compulsory voluntary arrangement (CVA).
Restaurants at the Corn Exchange and on Deansgate are part of the restructure being carried out by professional services giant KPMG.
The rescue plan also involves cutting rent payments at other outlets.
Byron currently employs about 1,800 staff in 70 restaurants across the UK.
Will Wright, restructuring partner at KPMG and proposed ‘supervisor’ of the CVA, said: “Over the last 10 years, Byron has grown to become a stand-out name within the UK’s casual dining sector.
“However, in recent times, certain parts of its portfolio have not met expectations, and with gathering economic headwinds starting to impact the sector more profoundly, the directors embarked upon a strategic review of the business as a means of safeguarding its long-term future.
“As part of this strategic review, the directors have been successful in negotiating a financial restructuring with the company’s lenders and shareholders, which will enable new investment to come into the business.
Completion of this financial restructuring is conditional on the approval of the CVA proposal, which is designed to tackle the cost of the company’s leasehold obligations across its UK restaurant portfolio.
“As with similar CVAs, this arrangement seeks to strike a balance which provides a fair compromise to landlords, while allowing the viable part of the business to move forward across a smaller, more profitable core estate.
“It’s important to stress that no restaurants will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
Byron operates from 67 leasehold restaurants across the UK. It holds a further nine non-operational leasehold sites including its head office in London
Wright said: “The CVA essentially divides this portfolio into three categories. For a total of 51 Category 1 sites, the leases will be retained at current rents. A further five Category 2 leases, have been identified as being viable at a reduced rent, equivalent to two thirds.
“For the remaining 20 Category 3 sites, a reduced rent, equivalent to 55%, will be paid for six months, while the company engages with landlords to agree the basis of any continued trading from these premises.”
The company needs to secure at least 75% creditor approval for its CVA. A detailed proposal document is available to Byron’s creditors via a dedicated website. The creditors will vote on the CVA on January 31. KPMG says it will spend the next two weeks in talks with creditors to ensure they understand the full detail of the proposal.
