Rekom UK sold for £19.5m
Just one offer was received for the group of companies from a connected party, after it was established that no new capital investment was available from existing shareholders or secured creditors.
Jon Roden, Rob Parker and Helen Dale of Grant Thornton were appointed joint administrators on 1 February.
The sale involved the transfer of 24 trading locations and nearly 1,000 employees to the purchaser, with 19 locations closes and 464 staff made redundant.
Insufficient funds
Axiom, a secured creditor, was owed c£19.6m, including interest and charges.
Following the sale, the joint administrators made distributions totalling £19m to Axiom.
The administrators said they believe there are insufficient funds to make a distribution to ordinary, secondary or unsecured creditors.
Before the sale, the group had 46 sites and 1,318 staff.
During Covid the nightclub sector was forced to close up until July 2021, which incurred costs of approximately £900k a month with no ability for mitigation.
Trading was strong once restrictions were lifted in 2021, but during 2022 trading began to slow, with nightclubs suffering more than bars, and the seasonal decline worse than anticipated.
Administration sale
By February 2023, consumer spending declined, with the group’s target customers (18-25) were suffering disproportionately from rising cost of living pressures.
Cost-saving initiatives at the company included reduced opening hours, redundancies at head office, and a disposal process of lossmaking sites.
Despite the success of Rekom’s newer party bars, the larger nightclubs were loss making, and AlixPartners were drafted in to advise on options, including a potential accelerated M&A process.
No additional funding from existing shareholders or secured creditors was available.
An administration sale was agreed as no offers were received for the companies on a solvent basis, and additional finance could not be obtained to restore cash flow solvency.
Secured creditor Axiom, landlords and key suppliers were supportive of the transaction.
