Italian restaurant chain Prezzo is pressing ahead with plans to close almost a third of its eateries after its restructuring plan was approved by the High Court.
In April, the restaurateur outlined its intentions to close 46 of its "loss-making sites" in a bid to shore up its long-term future, with the firm's chief executive Dean Challenger calling the trading environment "some of the hardest times" for high-street retailers.
The plans would result in its restaurant portfolio dropping to 97, from 143, while 810 of its staff would be affected. But the judgment means the circa £32 million Prezzo owed landlords in accrued and future rents are wiped out as a result of the restructuring, leaving some of the UK's biggest property owners out of pocket.
Low footfall along with the "doubling" of its utility bills were major factors in its desire to reduce its footprint.
Prezzo will now put its restructuring plan into action after it was cleared by the High Court, with a judge ruling it "fair". According to court papers, the plan will allow the business to continue to trade as a going concern, with a much smaller number of outlets and on a financially sustainable footing.
Mr Justice Smith said: "As for the loss-making site landlords and local authorities, sustainable site local authorities and other unsecured creditors, all outstanding amounts would be fully written-off and no consideration paid, the rationale being that they would receive nothing in the Relevant Alternative."
Court papers suggest that the group has agreed solutions with some already. "Since the announcement of closure of the loss-making sites on 24 April, nine landlords have agreed surrenders with the Company and six have served forfeiture notices. These landlords will no longer be treated as Plan creditors. The Company is also in the process of trying to agree surrenders with nine other such landlords."
HMRC will, however, recover £3.3 million of the £11.8 million it is owed by the group. It had objected to the plan. That is £2 million more than they would have received if it had been a prepack administration.
Prezzo said that it was "now well-positioned to cater to changing consumer habits", with plans to invest in its menu. Challenger added: "This decision brings to an end our strategic review enabling us to focus on building a quality-led, profitable and sustainable business.
"Our restaurants are in the right locations, offering quality food and drink to our customers, served by teams committed to delivering an exceptional customer experience."
Prezzo permanently closed 22 of its restaurants in February 2021 after being bought via pre-pack administration by Cain International. The brand first put itself up for sale in July 2020 as the pandemic forced the closure of businesses across the country.