Upmarket Italian restaurant Gusto has become the latest chain to complete a Creditors Voluntary Arrangement (CVA). The group says that the move will secure the chain’s long-term future.
Agreed by 98% of Gusto’s creditors, the CVA will protect more than 600 jobs, but will also see four restaurants close with the loss of 105 jobs.
The chain’s 18-site estate includes restaurants in Alderley Edge, Knutsford, Cheadle Hulme, Didsbury and Manchester, with others in the North of England, the Midlands and Scotland.
The Gusto restaurants set for permanent closure are based in York, Lytham, Leamington Spa and Mere Green.
The business said that the CVA means that it is now well-funded and in a strong position to resume a growth strategy when appropriate. New agreements with landlords, agreed as part of the process, will also give the group confidence that they can weather any more coronavirus-related challenges.
Matt Snell, chief executive of Gusto, said: “The last six months have been the most challenging in the history of our business and the wider sector. The passing of the CVA is an important milestone, securing the future of the Gusto business and protecting more than 600 jobs.
“I would like to take this opportunity to thank all of our creditors and landlords for their support through this time and our investors for their vision in supporting our business plan.”
Many restaurant chains have applied for or agreed CVAs in recent years. The trend has accelerated following the coronavirus outbreak as more restaurant groups seek to manage debt, renegotiate liabilities and end unprofitable leases through a creditors’ agreement.
Several high street stalwarts including Pizza Express and Yo! Sushi have already agreed CVA proposals in 2020, while others including Pizza Hut and Wahaca are looking to approve similar deals. Mexican chain restaurant Wahaca is seeking to write off £25 million of debt as part of their proposal, in a CVA that would close more than a third of its restaurant estate.
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency said: “Gusto is the latest in a long line of restaurants to successfully reduce operating costs and liabilities as part of a CVA. It differs from most restaurants that have gone down this route because Gusto tends to cater to more of an upmarket customer base, but it just shows that few businesses are immune from effects of the coronavirus crisis.”
For more information about CVAs and how they can be used to secure your company’s long term future, speak to a member of the team today. Call: 0800 611 8888.