Revolution Bars Secures Court Approval for Restructuring Plan to Avert Collapse

Revolution Bars Limited, a part of the Revolution Bars Group plc and owner of the Revolución de Cuba and Peach Pubs brands, has successfully secured High Court approval for a restructuring plan aimed at preventing the company from collapsing into insolvent administration. The restructuring was deemed necessary due to the business's severe financial difficulties, which have left it heavily loss-making and reliant on group funding to survive.

During a hearing in London, Mr Justice Richards approved the plan, determining that it was "not unfair" to creditors, landlords, and shareholders. The plan involves altering the company's obligations under a £30 million revolving credit facility with NatWest bank and extending the timeline for paying off its tax debt. Additionally, the restructuring will involve "right-sizing" the company's lease portfolio to create a more sustainable business model.

Tom Smith KC, representing Revolution Bars Limited, outlined the dire financial situation the company faces, noting that without the restructuring, the firm would be unable to meet its debts and risked taking down the entire group. The company currently holds 48 leases across 43 sites in the UK, with six of these locations no longer trading.

The Revolution Bars Group has struggled significantly since the Covid-19 pandemic, suffering from substantial financial pressures, including inflation, labour shortages, and the shift towards remote working. The company is "balance sheet insolvent," with assets totalling £49.6 million against liabilities of £118.7 million. It is also forecasting a loss of £15 million for the financial year ending June 2024 and owes £48.1 million to its sister company, Inventive Service Company Limited.

The restructuring plan includes writing off £4 million owed to NatWest and extending the repayment date from October 2025 to October 2028. Revolution Bars Group plc will also benefit from an "interest holiday" in 2024, while NatWest will receive warrants over 10% of the enlarged share capital of the parent company. Additionally, a £2 million tax debt to HMRC will be deferred until September 2024.

As part of the plan, Revolution Bars Limited intends to retain 14 of its most profitable sites while considering 18 sites as economically unviable. A sale process earlier in the year returned offers that were ultimately rejected as they would not provide better returns than the restructuring.

The plan has received overwhelming support from creditors, despite a small number of landlords voting against it without providing clear reasons for their opposition. The restructuring is also contingent on the successful issuance of new shares, which could result in an 84.6% dilution of existing shareholders.

Revolution Bars CEO Rob Pitcher expressed optimism following the court’s approval, thanking the teams, stakeholders, and advisors involved in developing the plan and looking forward to a more secure financial future for the group.

‍