Bars group receives approval for CVA reorganisation

Manchester-based Revolution Bars Group has won approval for its CVA (company voluntary arrangement) proposals.

The group launched the CVA for its Revolution Bars Ltd (RBL) subsidiary last month, due to the impact of coronavirus on its trading.

At a meeting today (November 13) more than 88% of all creditors voted in favour of the scheme, surpassing the 75% requirement, and more than 75% of the unconnected creditors voted in favour, which required a 50% approval.

In accordance with the relevant statutory provisions, there is now a 28-day period in which a creditor may apply to court to challenge the CVA.

RBL includes 51 Revolution-branded leasehold bars.

Following the approval of the CVA, RBL will exit six bars imminently, and reduced rental terms have been agreed in respect of seven other bars that are now subject to turnover-based rents with minimum rental thresholds for the duration of the two-year CVA period.

The group said currently all of its English bars are closed until at least December 3, as a result of the latest UK Government lockdown.

However, the group reopened two bars in Wales this week and reopened three of its seven Scottish bars last week following the lifting of restrictions in those countries, while its bar in Northern Ireland will remain closed until November 27.

The group estimates that its cash flows – before one-off costs of implementing the CVA of approximately £1.1m – will improve over the two-year period of the CVA by approximately £4m.

Net bank debt is currently £13.5m compared with current committed bank debt facilities of £37.2m, which reduces to £29.3m at the end of March 2021, and to £28.1m at the end of June 2021.

Under the terms of the CVA, £1.3m of rent and service charge arrears will be paid on November 20, 2020.

The group’s cash burn rate, if all its bars are subjected to an enforced closure and assuming the continuation of the current CJRS and other government reliefs, is estimated at approximately £0.4m per week.

While there remains significant uncertainty due to the pandemic, the board said it is very encouraged by the welcome news of a COVID-19 vaccine potentially becoming available by Christmas, which suggests revenue generation may return to more normal levels through the course of 2021.

Following the successful completion of the CVA process, Mike Foster, chief financial officer, has indicated that he will not seek re-election at the upcoming AGM on December 22, 2020 and will step down from the board at the end of that meeting.

The board said it is intended that Danielle Davies will be appointed as chief financial officer immediately following the AGM.

Danielle joined the group in July 2020, as part of the long-term succession planning process and has been working closely with Mike since that time. Danielle is an ACA and brings extensive retail experience through her most recent roles as chief financial officer at Footasylum and director of finance at Pets at Home, and in senior financial positions at Matalan and the Co-op.

Now that the CVA has been approved, the group will report its final results for the 52 weeks ended June 27, 2020, on December 17, 2020.

Chief executive, Rob Pitcher, said: “I’m grateful for the support of our creditors in approving the CVA of Revolution Bars Limited providing the opportunity for the business to move forward with much greater certainty for all its stakeholders.

“This is a positive step in the right direction for the business.

“However, whilst we welcome the support Government has given, the hospitality sector has been severely affected by their often illogical, inappropriate and disproportionate response to the coronavirus pandemic.

“To plan ahead, we still require guidance on how the sector can ultimately exit the current restrictions in a safe and timely manner.

“With phase one of the vaccine rollout potentially commencing in December and set to protect 99% of the UK’s at-risk population, we have some potential indication of a timeline to normality which will save jobs and allow us to resume delighting our customers again.”