LEADING nightclub operator CanDu Entertainment is set to enter administration as the ailing club and bar sector continues to feel the effects of the economic downturn.
It is understood that Ernst & Young (E&Y), which was appointed as standby administrator by lender to CanDu, could call time on the company - owned by Close Brother Private Equity - as soon as today.
According to the Telegraph, a proposed deal has been put forward by banker Jason Granite which involves the sale of CanDu`s better performing establishments to the new owner of the Sports Cafe chain, which was itself places in administration in February.
Granite - who runs insolvency specialist Agilo - bought CanDu`s bank debt from Barclays Bank at a discounted rate earlier this year to take control of the chain. He also bought five of Sports Cafe`s eight bars out of administration.
Sources suggested to the paper that Agilo will take more than 20 of Candu`s 33 nightclubs and run them alongside the Sports Cafe brand under new chief executive and former Novus Leisure commercial director James Spragg.
It is widely believed the rest of the clubs will close unless E&Y can find a buyer.
The problems in the sector do not stem from one paticular source. Rather it`s a combination of new legislation and instability in the financial markets which have conspired to hit the industry hard.
One bar and nightclub chief executive told the Telegraph: "The nightclub sector is under the most pressure across the whole leisure space.
"The changes to the licensing laws - which mean you can sit in the pub until 2am - and the introduction of the smoking ban have had a huge effect."