Chilango creditors approve CVA

Chilango’s Company Voluntary Agreement (CVA) has been approved by creditors and shareholders today.

The CVA was approved by 84% of creditors and shareholders, with 98.6% of shareholders also backing the creation of new shareholders for bondholders.

The company had previously raised more than £3.7m via its burrito bond’s mini-bond scheme. The new share class for the bondholders will maintain their principal balances and returns without diluting the voting or company ownership rights of existing shareholders.

The CVA approval follows the news that co-founders Eric Partaker and Dan Houghton will give up their posts co-CEOS. Houghton’s notice period ended at the end of last year with Partaker remaining until a new managing director can be found.

In a joint statement they said: “We are humbled to have received such strong support from our creditors and shareholders and appreciate how pragmatic and understanding our stakeholders have been.

"While Chilango remains profitable at the restaurant level, with three consecutive years of +6% like-for-like sales growth, the CVA enables the company to exit non-trading leases, reduce rents in select locations, and restructure the repayment profile of the company’s debt. Together with a reduction in central costs, the successful CVA will materially improve the balance sheet, and also make the business both EBITDA and cash flow positive at a group level."

Gordon Thomson, a retail restructuring director at RSM added: “The Chilango CVAs were approved by their creditors earlier today. This endorsement reflects the support for the Directors’ proposals and ensures the business is well structured to develop further.”