Exclusive – Prezzo puts restructuring plan to creditors, suffers £4m funding shortfall: Prezzo, the Cain International-backed Italian dining group, has written to its creditors, including landlords, setting out a restructuring plan, which if not implemented could see it enter administration and cease trading immediately. In the letter seen by Propel, the 143-strong company, which last week announced the closure of 46 sites, said it suffered a significant funding shortfall during April 2023 “in an aggregate amount in excess of £4m”. The business, which is working with FRP Advisory on its options, said the aggregate amount of the sums owed by Prezzo Trading under the loss-making site leases as “at the effective date is anticipated to be £32,193,907”. It said that the approximate value of the amounts outstanding in relation to secured loan notes “at the effective date” was £22,640,516. The letter states: “Prezzo Trading has suffered a significant funding shortfall during April 2023 in an aggregate amount in excess of £4m, which includes (i) an aggregate amount payable to HM Revenue & Customs (HMRC) in respect to PAYE, national insurance contribution (employee) liabilities and national insurance contribution (employer) liabilities of £1,005,388 payable on 19 April 2023 and (ii) an amount payable to HMRC in respect to VAT of £2,934,514 payable on 30 April 2023. On 1 May 2023, Prezzo Trading had a further shortfall of £1,350,724 in respect of rent payments due under the leases of its restaurants. Prezzo Trading is unable to pay those amounts. Unless the group implements a financial restructuring of the balance sheet, these entities will be insolvent on both a cash flow basis and a balance sheet basis. Therefore, absent the implementation of such a financial restructuring Prezzo Trading will need to immediately stop trading and the directors of will have no option but to commence formal insolvency proceedings. The board considers one of the principal reasons that the Prezzo business is loss making is due to 47 restaurants that are loss making and which are, in the opinion of the directors and the management team, unlikely to return to profitability based on forecast performance. The board determined the Prezzo business can only continue to operate as a viable business by closing the 47 loss-making sites and for the restaurants at those sites to cease trading. The board consider the closure of the loss-making sites and the agreement of the terms of the lease surrenders with the loss-making site landlords will require additional funding of £3m to £5m. This will further increase the overall funding shortfall of the group. Given the lack of availability of any further finance from the group's current creditors to address the funding shortfalls… and the group's inability to raise finance from third party financiers given its distressed financial position, the board has concluded the group will need to implement a financial restructuring in order to compromise certain of its unsustainable financial and operational liabilities as described. The board has concluded the restructuring plan is the most appropriate process to utilise in order to implement the group's restructuring and preserve the most value for the group stakeholders.” The group’s creditors, including landlords, who include some of Britain’s biggest commercial property-owners, will be able to vote at a hearing on Monday, 22 May. Prezzo features in the Who’s Who of UK Food and Beverage. It is the first database where full profiles of 667 of the UK’s top food and beverage operators are available in one place. The latest edition features more than 174,000 words of content, including 74 updated entries, while 16 new companies were added. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.