Caffe Nero’s CVA plans have been dealt a blow after it emerged that a handful of landlords – including the property company owned by Sir Alan Sugar – have launched a legal challenge to block the move.
Sky News said that Amsprop Investments, the private commercial property group owned by The Apprentice star, is among seven parties contesting the chain’s restructuring.
Amsprop’s involvement in the challenge is understood to have been filed on Christmas Eve.
Under CVA plans announced by Caffe Nero in November, landlords would forfeit most of their outstanding rent payments.
However, Sky said they were promised full payment of rent arrears as part of a takeover offer proposed just before the CVA vote by EG Group, the petrol station network operated by brothers Mohsin and Zuber Issa.
The Issas, who are in the process of buying the Asda supermarket chain, are reported to be underwriting the cost of the legal challenge, which Caffe Nero has said it will “defend vigorously”.
Caffe Nero’s CVA was approved by creditors before Christmas, and will be implemented unless the challenge is successful. It currently operates around 800 stores in the UK.
Sky News said that Caffe Nero’s directors refused to adjourn the CVA vote despite the eleventh-hour emergence of EG’s takeover bid – a refusal contested in court documents.
In a statement over the weekend, a Caffe Nero spokesman told the news channel: “We are aware a challenge has been filed by a small number of landlords at what appears to be the instigation of a third party.
“We still firmly believe the terms of the CVA, which passed with over 90% support, are in the best interests of all our creditors and we will openly engage with any landlord who wishes to discuss it further. We intend to defend the challenge vigorously.
“In the meantime, we remain focused on managing the business through the current Covid-19 enforced trading restrictions, and re-growing our sales in the months and years ahead.”
Back in November, Caffe Nero founder Gerry Ford said the crisis had “decimated” the company’s sales after 83 consecutive quarters of growth prior to March.
He said the business had been badly hit by people continuing to work from home and a reduction in footfall to commuter and city centre locations, where many of its stores are located.
Mr Ford added that the CVA would allow the company to “better manage its fixed costs moving forward”.