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Wed 18th Jul 2018 - Gaucho on brink of administration |
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Gaucho on brink of administration: Gaucho, which is owned by private equity firm Equistone, is on the brink of administration after its lenders opted not to pursue a rescue deal. Sky News has reported the company, which employs about 1,500 people, has filed a notice of intention to appoint Deloitte as its administrator. While that gives it up to ten days’ breathing space from creditors, sources close to the company said it could fall into administration as soon as this afternoon (Wednesday, 18 July). The decision will come after weeks of talks about a sale to new investors, with the restaurant entrepreneur Hugh Osmond among those who examined a potential deal. However, insiders said the failure of Gaucho’s lending syndicate to unanimously back any of the proposals had made the company’s insolvency inevitable. Sources said they expected the Gaucho chain of restaurants, with 16 outlets, to emerge as a “viable business” from the administration, although the loss-making CAU-branded chain is likely to close. Sky News revealed late last week Gaucho was racing to find new investment to pay a seven-figure tax bill, with Her Majesty’s Revenue & Customs now facing the prospect of that demand being unmet. In a statement issued in response to an enquiry from Sky News, a Gaucho spokesman said: “Despite an extensive options process which attracted proposals from a number of parties, it is with regret that due to the complexities of the group’s legal structure, ongoing underperformance at CAU and the level of indebtedness, the directors have been unable to find an agreed, solvent solution. Consequently, the directors have today filed in court a notice of intention to appoint an administrator for the business. Until such time as the administrator has been appointed and agreed plans with management, it is business as usual.” Details of the rescue proposals remain patchy, although none of the four known suitors – Osmond Capital, Core Capital, which is owned by ESO Capital, Limerston Capital and the current owner, Equistone – offered to pay close to the £50m owed by Gaucho to its banks. Under the management team’s proposals, the Gaucho chain would have continued to operate while CAU would – if approved by creditors – close through a Company Voluntary Arrangement. CAU has double-digit declines in like-for-like revenues, with overexpansion, poor site selection and onerous lease arrangements among the factors now contributing to Gaucho’s financial difficulties. The company’s founder, Zeev Godik, stepped down as chief executive in November. He was replaced by Oliver Meakin, who joined from electrical retailer Maplin. In May, managing director Tracey Matthews announced she was stepping down after 18 years with the business to pursue new opportunities. Latest accounts available at Companies House showed for the year ending 31 December 2016 CAU generated turnover of £25,507,748, compared with £16,869,476 the previous year. It reported a pre-tax loss of £2,449,797, compared with a loss of £901,643 the year before.
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