ICSM News: major food supplier enters administration; pre-pack for burger firm; debts dumped by restaurant chain; care home debt crisis; and one of the worst late payers in the UK exposed

Food supplier enters administration

A firm that supplies food to some of the most famous names in the casual dining world has gone into administration. Founded in 1989 in North Wales Baraka Foods supplied food to Domino’s Pizza, Wagamama, Mitchells & Butlers, P&O Ferries, Angus Steakhouse, Benugo and Las Iguanas. Insiders believe it may be sold but dumping the unprofitable parts of the business. Clearly Covid-19 has wiped out the restaurant and casual dining businesses sending a raft of companies from Pizza Express to Café Rouge into financial black holes and the pandemic has had the same effect on suppliers.

Ian Carrotte of ICSM Credit commented that most firms involved in hospitality were at crisis point with furloughed staff, little business due to lock down and a start stop Government policy as outbreaks of the virus pop up in towns and cities reversing the opening up. “Suppliers need to be extra vigilant,” he said, “as so many have been dragged down by the collapse in the sector as Baraka Foods have found out.”

Be careful supplying care homes

Business Rescue has run a warning on its website about the struggling care home sector. Hit by record Covid-19 deaths and a reluctance of relatives to place their elderly parents into a home for fear of the dreaded virus care homes are in financial difficulties they reported.

ICSM Credit has had indications from members there is a problem with some of the larger care home groups who have proved in the past to not be immune to collapse. During the Covid-19 crisis Carlauren Group based in Yeovil went into administration, and the Four Seasons Healthcare group is in administration has off-loaded 58 of its homes to new operators while closing ten more completely.

Business Rescue reported: “According to the latest research from the UK Local Government Association, as a result of the pandemic, the care home sector could potentially be looking at a shortfall of around £0.5 bn, with the majority of that due to a reduction in private or NHS care placements.

“Local authorities across the UK have closed many care homes in the past decade, arguing that it is much cheaper to pay a private care home than to provide that care themselves. But the long-term viability of a private care home is not guaranteed, given the huge financial pressures many face today as a result of the pandemic.”

Pre-pack for burger chain

The much criticised procedure of pre-packs has saved the Byron Burger chain from administration but not without controversy. Critics say pre-packs do not have to be scrutinised by the Pre-Pack Pool – a group of professionals who can give the deals a thumbs up for credibility – meaning there have been some highly dubious processes.

Ian Carrotte of ICSM Credit commented: “Byron Burgers will probably be sold to to Calveton UK as part of a pre-pack administration according to reports. If pre-packs are aimed at saving jobs and business then you have to question this one. Apparently only 20 of the 51 restaurants will be saved along with only a quarter of the jobs of more than 1,200 staff. Then there are the suppliers who will be wondering if they will receive anything meaning there are more questions than answers.”

Sky News and Business rescue reported tah Byron faced difficulty in accessing financial support under the Government's emergency loan schemes, and ‘was hit by the muddled reopening guidelines, the prospect of a second wave of the coronavirus pandemic and the restraints imposed by social distancing.’ KPMG were Byron Burgers administrators who initially developed a CVA.

Big table for big names

Las Iguanas, Bella Italia and Café Rouge brands have been acquired by private equity firm Epiris from the collapsed Casual Dining Group and have been rebranded under the Big Table name. The deal that will save 4,000 in 150 restaurants if all goes to plan.

Ian Wood of Epiris said: "In common with most of the sector, the Big Table's restaurants have been closed since late March. We will work with James and his team to re-open the restaurants, bringing more than 4,000 people off furlough to enable customers to enjoy dining out again. This transaction will enable the business to trade through the uncertain months ahead and invest in its three strong brands to deliver an even better experience for their customers."

Spragg added: "This is a very positive outcome for the business. We are delighted to have concluded this process and to be working with such experienced and knowledgeable investors. We inevitably emerge from this process as a leaner business, and one that is now equipped to navigate the challenges the industry faces, safeguarding thousands of jobs."

Casual Dining Group fell into administration earlier this year closing 91 of its restaurants and shedding almost 2,000 jobs.

Clare Kennedy of administrator AlixPartners said: "We received a significant level of interest in the group, which is a testament to the strength of its management team, the affection in which its brands are held by the public and the quality of its people. We are extremely pleased to have been able to help the group find a new investment partner with such strong industry credentials and we wish both parties and everybody who works at the Big Table all the very best for a successful future."

Builder exposed as late payer

Building magazine has exposed Multiplex for taking 50 days to settle its bills. Earlier during the Covid-19 crisis a number of companies were thrown out of the Prompt Payment Code (PPC) for late payment including John Sisk & Son, BHP Billiton, DHL, GKN Plc and tea maker Twining. In addition AB World Foods, Aberdeen Asset Management PLC, BAE Systems (Operations) Limited, Bottomline Technologies Limited, British American Tobacco (Holdings) Limited, Cereform, Diageo Scotland Limited, Diageo Global Supply IBC Limited, Diageo Northern Ireland Ltd, Diageo Great Britain Ltd, Eurovia Infrastructure Limited, F M Conway Limited, GlaxoSmithKline Consumer Healthcare (UK) Trading Limited, GlaxoSmithKline UK Limited, Kier Integrated Services Limited, Leonardo MW Limited, Macdonald Humfrey (Automation) Limited, McNicholas Construction Services Limited, PGDS (UK One) Limited, Sita Information Networking Computing UK Limnited, Smiths Detection, Unilever UK Ltd have been suspended rather than expelled.

Businesses suspended from the PPC have to produce an action plan to achieve compliance before being reinstated.

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk