Leon has announced plans to launch a restructuring scheme after the group saw a drop in sales amid the pandemic.
Following a 70% drop in sales, the restaurant chain appointed Quantuma to launch a company voluntary arrangement (CVA).
Leon has said it does not plan for any job losses and that most of its stores will remain open. Sky News has reported that a restructuring plan will see restaurants switch to turnover-based rents.
“The CVA is intended to provide the company with a foundation to first survive and then carefully rebuild. We had a growing and profitable business before Covid,” said John Vincent, founder and chief executive of Leon.
“Despite taking many actions to reduce cost and optimise revenue during the crisis, the continued lockdowns and restrictions have made this CVA a necessity.”
“It will give the business the breathing space it needs before it can fully resume normal trading and look to grow again.”
“We started the year as a profitable and growing business but the effects of the repeated lockdowns and tier restrictions have made our current business model untenable.”
As part of the restructuring plan, it has been agreed that shareholders will inject £3m into the group if cash reserves fall below £2.25m.
Andrew Andronikou, managing director at Quantuma, added: “Our number one priority, as we work with the board of Leon over the coming weeks and months, will be to allow the business to navigate the current challenges and help the business return to its positive trajectory whilst protecting jobs and minimising the need for store closures.”