BusinessBusiness RecoveryLandlords want fairer insolvency rules as Travelodge restructures

Landlords want fairer insolvency rules as Travelodge restructures

British Property Federation concerned that insolvency practitioners will pick and choose creditors to make sure proposals are voted through

Landlords want fairer insolvency rules as Travelodge restructures

LANDLORDS’ REPRESENTATIVES have bemoaned insolvency rules that have seen their members lose a slice of debt owed to them as part of a deal to keep hotel chain Travelodge alive.

Restructuring and refinancing of Travelodge will be supervised by KPMG. As part of agreeing a company voluntary arrangement, a fifth of landlords (109 properties of the 456-strong estate) will be subject to rent reductions in the deal.

Liz Peace, chief executive of the British Property Federation, said: “Once again landlords are being asked to play a significant part in rescuing a business, and a minority at that, who are being asked to take a big ‘hit’ to keep a far bigger business afloat.”

While welcoming the fact that other creditors were also taking cuts to keep the business afloat, including a £235m bank debt write-off, Peace raised issues with the potential for insolvency advisors to manoeuvre creditors to gain a sufficient number to gain clearance on proposals. A CVA is an agreement between an insolvent business and its creditors to repay a percentage of its debt over a period of time. The agreement, which takes a business out of insolvency, requires 75% creditor approval by value.

“We are becoming increasingly concerned, however, with a system that creates such a range of winners and losers and allows advisers to dice and slice creditors to reach the required voting thresholds,” she said.

“Everyone can only work within the rules that are set, and in this case the insolvency practitioners are simply working to get their job done, but what we are saying is that such rules need reviewing and some greater sense of fairness restored.”

A further 49 hotels will shut as part of the restructuring.

Other terms of the deal include: at least £75m of new money to be injected into the company; and £55m will be invested into a major refurbishment programme across the estate covering more than 11,000 rooms and 175 hotels.

The refurbishment programme will commence in early 2013 and continue through to summer 2014. Bank debt of £235m will be written off and £71m repaid, reducing total bank debt from £635m to £329m; the repayment date of the remaining debt will be extended to 2017 and cash pay interest will be reduced significantly to a rate of 0.25% above LIBOR through to the end of 2014.

Related Articles

EY hired by Carillion to review finances

Accounting Firms EY hired by Carillion to review finances

3m Alia Shoaib, Reporter
Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

Business Recovery Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

7m Emma Smith, Managing Editor
Administrators from KPMG appointed to City Motor Holdings

Business Recovery Administrators from KPMG appointed to City Motor Holdings

1y Richard Crump, Writer
BHS enters administration as Duff & Phelps fail to find suitable buyer

Accounting Firms BHS enters administration as Duff & Phelps fail to find suitable buyer

1y Fraser Simpson, Reporter
BIS launches insolvency consultation

Business Recovery BIS launches insolvency consultation

1y Chris Warmoll, Writer
AlixPartners advises Store Twenty One on CVA deal with creditors

Accounting Firms AlixPartners advises Store Twenty One on CVA deal with creditors

1y Richard Crump, Writer
FRP Advisory hires new partner from KPMG

Accounting Firms FRP Advisory hires new partner from KPMG

1y Richard Crump, Writer
Former Torex CEO sues KPMG and RBS

Accounting Firms Former Torex CEO sues KPMG and RBS

1y Richard Crump, Writer