Prezzo Limited (“Prezzo”) announced a restructuring plan in order to deliver a sustainable long-term future for its business on 2 March 2018. The detailed proposal can be downloaded from the link below.
The proposal allows Prezzo to rationalise its estate and to reduce the cost of its leased restaurants. This will allow the company to focus its resources on the core, more profitable restaurants whilst continuing to meet its obligations to suppliers and creditors.
Prezzo will be better placed to implement the changes required to refresh the Prezzo brand and to counter the economic challenges currently affecting the casual dining sector.
This proposed restructuring, under the terms of a company voluntary arrangement (“CVA”), will allow Prezzo to continue operating while it implements plans to improve its food and service and to invest in new restaurant layouts and designs.
Under the CVA process, Prezzo has submitted a restructuring plan to its creditors and will seek their approval of the CVA at a meeting on 23 March 2018. If approved by the creditors, the CVA proposal will substantially reduce Prezzo’s rental obligations and will move the business towards a more robust business model. Where restaurants are closed, we will do everything possible to redeploy staff to other sites.
1) WHAT IS A CVA?
A CVA is a statutory procedure designed to help a company form a compromise or arrangement between it and its creditors. Prezzo’s proposed CVA will allow it to reduce the rent paid on some sites to affordable levels and enable it to terminate leases at sites that would not be economic even with a reduced rent.
2) WHY ARE WE DOING THIS?
The aim of the CVA is to ensure that all of our restaurants are profitable, so that we have a business that we can develop and invest in for the future. The actions we are taking now are to ensure the future financial stability of the business and the majority of Prezzo’s restaurants will be unaffected by the process
3) HOW DOES A CVA WORK?
A company can propose a CVA with its creditors to address its financial difficulties and assist in a broader turnaround plan. To become effective, a CVA requires the approval of at least 75% (by value) of a company’s creditors. Once approved, a CVA is binding on all creditors, including any creditors who did not vote or voted against the proposal. This procedure is set out in detail in the CVA document sent to creditors (which can also be downloaded above).