Prezzo Holdings, the Italian restaurant group, has warned that it will enter administration should its restructuring plan not gain approval from creditors at a hearing on 22 May.
Private equity-owned, Prezzo said it has £70mln in liabilities and plans to close around 50 unprofitable sites, axing more than 800 workers.
The company owes £32mln to the landlords of sites that were shut and an additional £10mln to HM Revenue & Customs (HMRC) in unpaid bills.
Restructuring is necessary for Prezzo, the company revealed in a letter to the Times, as it argued it does not have the funds or ability to raise further capital to deal with the liabilities.
Now the group is arguing it can only continue operating if it closes and surrenders the leases of its loss-making venues – potentially costing a further £5mln.
This option will be put to creditors at the hearing later in May.
Last month, the hospitality firm was unable to pay its £4mln bill to the HMRC and has already begun working with FRP Advisory to explore options to resolve this.
In late 2020, the hospitality business was purchased by Cain International, an investment firm founded by Chelsea FC owner Todd Boehly.
The British company quickly closed 22 sites after it was bought to help bring it out of pre-pack administration, but the impact of Covid and the competitive Italian cuisine industry meant further restructuring is required.
Prezzo also currently owes its owner £22.6mln in outstanding loan notes.