Caffè Nero facing court battle over restructuring plans

Caffè Nero is to face a court battle over its restructuring plans after a judge rejected the chain's bid to have the case dismissed.

A spokesperson for Caffè Nero said it was facing a legal challenge from a single landlord and has “full confidence" in its position ahead of the trial starting this summer.

The coffee chain runs more than 800 UK stores with many located in city centres or transport hubs, which suffered a drop in footfall during lockdown. This led the business to secure approval to enter a company voluntary arrangement (CVA) last year with the backing of over 90% of its creditors.

The Times reported this would see landlords receive 30p for every pound they are owed, which attracted opposition from some.

This was due to Caffè Nero rejecting an eleventh-hour takeover bid ahead of the CVA vote by the billionaire Issa brothers, whose company EG Group bought the Leon restaurant chain in April. The Issas had proposed paying Caffè Nero’s landlords in full for rent arrears accrued during the pandemic.

Nine landlords joined a legal challenge to the CVA, but only one remains.

A spokesperson for Caffè Nero said: “Our attempt to have the court case dismissed out of hand due to it being brought by a single landlord...has not been successful. This is unfortunate as we had hoped not to have this as a further distraction for our business or the other landlords who had hoped to collect their arrears. The trial will continue as expected later in the summer and we continue to have full confidence in our position.”

Caffè Nero said sales have surged 82% during the 13 weeks to 31 May and, after repaying a £12.2m liquidity facility loan, it has now repaid all bank loans borrowed during the coronavirus crisis.

The coffee chain was founded by Gerry Ford in 1997 and employs over 6,000 people.

Image: AVM Images / Shutterstock