Scotch Steak Houses investigation continues following collapse

26 June 2013 by
Scotch Steak Houses investigation continues following collapse

The administrators of London-based steak chain Scotch Steak Houses are still investigating transactions which took place before the date of administration.

Administrators Wilson Field were called in to look after the business in May this year and the restaurants were closed with the loss of 17 jobs.

Scotch Steak Houses, run by Ali Salih, had grown to trade from seven locations across London by 2009, but closed several sites by the time Wilson Field was appointed, following a run of poor trading.

The administrator is now investigating transactions at the firm, ahead of its administration. The company was owned by Ali Salih, who was previously involved with the original Aberdeen Steak House Group, which he built up to 30 sites until it too collapsed - it was sold out of administration in 2003 and still trades today.

In an administrators' report filed on the Companies House website, Wilson Field gave details of how Scotch Steak Houses slipped from a position of having accumulated profits of £933,764 in 2009, to making losses of £138,220 and £149,479 in 2010 and 2011 respectively.

As the situation became more difficult, the directors attempted to close several of its leasehold sites to save costs, selling the company's interest in the leases at 103 Charing Cross Road, 25 London Street and 215 Piccadilly.

The company also vacated 166 Victoria Street as the area was redeveloped.

But the closures were still not enough to return to profit. An attempt to turn its site 296 Strand into a high-end burger restaurant hit trouble as the directors struggled with high costs and eventually forfeited the lease.

That meant that the business was left with just two sites, on 117-119 Queensway and 53 Shaftesbury Avenue, although legacy debts put the business under pressure and it started to fall into arrears on PAYE, VAT and staff payments.

In January 2013, the company tried to do a deal to sell the interest in the lease of 53 Shaftesbury Avenue to New Scotch Steak House Limited (NSS) for £150,000 plus rent arrears of £157,400. NSS then attempted an immediate deal with a third party to sell the interest on for £550,000 plus rent arrears of £157,400, at an immediate profit.

Meanwhile, creditors began to exert more pressure on the business, with the landlord placing a freezing order against the company in February this year. The liquidators of a meat supplier owed £220,000 were also threatening winding up proceedings against the company.

It was at around this time that the company also agreed to sell its interest in in its Queensway site to NSS for £10,000 - seemingly below market value.

In a statement, Wilson Field said: "Robert Dymond and Lisa Hogg of Wilson Field were appointed as joint administrators on 22 April 2013.

"Initial investigations have established that following an extended period of unprofitable trading the directors took steps to enter a program of shop closures. The plan was to save running costs and release deposits and any value of premiums in leasehold premises. This produced mixed results.

"There are issues which are still under on-going investigation including transactions which took place before the date of Administration. At this stage no conclusions have been reached."

Steak restaurant chain Scotch Steak Houses has entered administration >>

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