Troubled bar firm Revolution has secured a High Court鈥檚 judge approval of a restructuring plan, after arguing it was needed to save the business from collapsing into insolvent administration.
Revolution Bars Limited, part of a group owning the Revolucion de Cuba and Peach Pubs brands, is 鈥渉eavily loss-making鈥 and 鈥渄eeply unprofitable鈥, the court was told.
Lawyers for the Ashton-under-Lyne business, a subsidiary of Revolution Bars Group plc, said it was reliant on funding from the group 鈥渋n order to survive鈥 but it was forecast to 鈥渞un out of cash鈥 in August.
At a hearing in London on Thursday, Mr Justice Richards approved the plan, concluding it was 鈥渘ot unfair鈥 to creditors, landlords and shareholders.
The restructuring scheme will amend Revolution Bars Limited鈥檚 obligations under a fully drawn 拢30 million 鈥渞evolving credit facility鈥 with NatWest bank and extend the time to pay its tax debt, its legal team told the judge.
It will also feature the 鈥渞ight-sizing鈥 of a portfolio of leases 鈥渋n order to create a sustainable business鈥.
Tom Smith KC, representing Revolution Bars Limited, told the hearing that the firm and its parent company had 鈥渞un into financial difficulties鈥 and faced being unable to pay debts without the restructuring plan between it and creditors.
The judge asked: 鈥淭he Revolution brand or business is in danger of taking the whole group down with it as matters stand?鈥
鈥淵es, that鈥檚 broadly right,鈥 the barrister replied.
In written arguments, Mr Smith said the company held 48 leases linked to 43 sites across the 海角视频, six of which 鈥 Southend, Torquay, Beaconsfield, Derby, Wilmslow and Liverpool St Peter鈥檚 Square 鈥 were no longer trading.
Like other hospitality businesses, the Revolution group was 鈥渁dversely affected by the Covid-19 pandemic and suffered significant losses as a result,鈥 Mr Smith said.
He added that it had 鈥渞emained subject to serious financial pressures as a result of, among other things, inflationary pressures, labour shortfalls and the trend towards working from home鈥.
Revolution Bars Limited was 鈥渂alance sheet insolvent鈥 with assets of 拢49.6 million but total liabilities of 拢118.7 million, the judge was told.
The business 鈥渃ontinued to perform poorly鈥 and when the restructuring plan was launched was forecasting a loss of 拢15 million in the financial year to June 29 2024.
It is also 拢48.1 million in debt to sister firm Inventive Service Company Limited.
Mr Smith said: 鈥淲ith an unprofitable business and no cash, unless the restructuring is successful, the group companies will, save for the Peach Group, collapse into insolvency processes.鈥
He said the plan would see 拢4 million owed to NatWest written off and a repayment date extended from October 2025 to October 2028
Revolution Bars Group plc will have an 鈥渋nterest holiday鈥 in 2024, while NatWest will receive warrants over 10% of the enlarged share capital of the parent company.
A payment of 拢2 million in HMRC tax debt will also be deferred to September 6 2024.
Revolution wants to retain 14 of its 鈥渕ost profitable sites鈥, while 18 sites are considered to be 鈥渆conomically unviable鈥, Mr Smith said.
The barrister said a sale process announced by the parent company in April returned six offers, the best of which were 拢16 million cash for the Peach Group and 拢10 million cash for profit-making sites and assets within Revolution Bars Limited and De Cuba brand.
It was decided that the proposals could not be delivered in the time available and would deliver worse returns to creditors than restructuring, he said.
A separate non-binding share acquisition proposal from competitor Nightcap was also rejected by the Revolution group.
Mr Smith said proposals to issue new shares in the Revolution Bars Group plc had raised around 拢12.5 million, but this was conditional on the completion of the restructuring plan.
鈥淚f all new shares to be issued through the fundraising are taken up, existing shareholders will be diluted by 84.6%,鈥 he added.
Mr Smith said there were 鈥渘o blots or potential blots鈥 in the restructuring scheme, adding that it was designed to ensure that all creditors are paid more under the plan than they would receive under an insolvent administration process.
Mr Smith said 鈥渁 small number鈥 of landlords had voted against the plan, adding that there had been 鈥渘o attempt to articulate any reasons for their opposition鈥 and 鈥渘o reason has been advanced before the court as to why the plan should not be approved鈥.
The restructuring plan received 鈥渙verwhelming鈥 support from creditors who cast votes at meetings in July, the lawyer said.
On Friday morning, Revolution Bars CEO Rob Pitcher said: "We are very pleased that the Court has sanctioned the Restructuring Plan for Revolution Bars Limited. The Group is now well diversified across the key brands, providing a more secure financial base and we look forward to the future with improved optimism.
"We know this has been a very difficult period for all of our teams both in our sites and in our Support Office and I'd like to thank them for their support and resilience.
"I would also like to thank the Group's wider stakeholders for their support, including our secured lender, current shareholders, our new and existing shareholders who have participated in the Fundraising and all our advisors who have assisted us in the development of the plan".
