Caffè Concerto to launch CVA

08-Feb-2021 - Last updated on 08-Feb-2021 at 12:36 GMT

Related tags lockdown Coronavirus Landlord Rent arrears CVA

London-based patisserie chain Caffè Concerto is launching a Company Voluntary Arrangement (CVA) in an effort to reduce its rent debt after facing legal action from one of its landlords.

The Times reports that the group, which operates 20 sites in the capital, will use the CVA to try and force landlords to accept about 20p in the pound of what they are owed.

Caffè Concerto director Stephano Borjak said it had been left with no option after landlords lodged court proceedings.

Last week it was reported that both Caffè Concerto and burger brand Five Guys were facing legal action over unpaid rent after one of their landlords, Criterion Capital, filed respective county court claims against each operator.

Court documents showed that Criterion filed a £284,000 claim against Caffe Concerto, and a £1.5m claim to recover rent from Five Guys.

It also filed a seven-figure claim to recover rent owed from a third hospitality firm, which asked not to be named.

At the time Borjak said Criterion's behaviour amounted to 'harassment' and was 'completely unacceptable'.

Many hospitality firms have not paid any rent in nearly a year as a result of the impact to trade caused by Coronavirus pandemic.

Protections currently in place temporarily restrict landlords from pursuing aggressive forms of rent recovery such as statutory demands and winding-up petitions, but these are set to expire at the end of March alongside the lease forfeiture moratorium, which was introduced in March last year and prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic.

Fears are growing that, without further help from the Government, the end of the moratorium will leave thousands of lease-hold hospitality businesses exposed to all manner of legal action from landlords.

Loungers chairman and co-founder Alex Reilley recently told BigHospitality that he predicts the end of the rent protections will lead to a 'phenomenal glut' of CVAs across the sector.

A recent study carried out by commercial property restructuring specialist Cedar Dean revealed that 77% of hospitality operators are currently being forced to look at restructuring or insolvency options, with current rents remaining unaffordable for the vast majority of businesses.

Only 31% of businesses have successfully agreed new terms with the majority of their landlords, with 73% saying they won’t survive the next six months without further support from the Government or their landlord.

To read BigHospitality's in-depth analysis of what will happen when the lease forfeiture moratorium expires, click here.