Laurel-VBM row set to spill over into court

The row between Laurel Pub Company and Vodka Bar Management dramatically escalated this week to threats of liquidation and lawsuits.

Both sides claim innocence in the bust-up that saw Laurel reclaim seven sites previously managed by VBM.

Laurel is owed £640,000 in rent. Chief executive Ian Payne said. "We have issued our own winding up order. We will probably pursue them through the criminal courts too. We do not want to trade with people like this."

VBM originally took on the problem sites and converted them to their own concepts such as Babushka and Bed 18 months ago.

The money owed mounted up between June and December 2003 claimed Mr Payne. He said he was not initially concerned as a NatWest bank account, under the joint-venture name of "Innovative Trading", held £1.3m.

Laurel's decision to take the bars back came when the £1.3m was allegedly withdrawn from the account in late December by VBM.

However, the pub company took back the units just 13 days before a clause in the joint-venture agreement would have allowed VBM to buy the bars outright.

VBM director Gary Hibberd accused Laurel of bully-boy tactics. He said: "This is a smokescreen - absolute rubbish. They used the rent owed as an excuse to take back the bars.

"We put a [repayment] agreement in place in December, which would see us buy the four London sites and pay the outstanding rent on exit from the joint venture. But then Laurel walked into the bars on January 2 and took them back.

"We took on their problems sites, which were losing £500,000 a year each, and bought them up to the level they are trading at now."

Mr Hibberd said Bed Bar in Smithfield, London, had weekly sales of just £2,000 before VBM took it to £40,000, and the King's Road Babushka in West London went from £4,000 to £20,000. "All seven bars were unprofitable with ugly rents," he said.

"Laurel didn't want these sites back then. This is obviously Laurel's way into the style bar market."

But Laurel claims it is the latest in a long line of creditors to take issue with the bar operator. Greene King is taking the vodka bar group to the High Court for £600,000, after it pulled out of a lease agreement. "It is true that the sites were trading badly before and we did try and sell them," said Mr Payne.

"But did we take these pubs back because we want to be style bar operators? No. We have never been style bar operators and we never will be. We will probably sell the sites on. We took this action on the advice of our lawyers and since we did we have been inundated with creditors."

Mr Hibberd said that creditors hadn't been paid because cash and stock was tied up in the seven bars, and because of Laurel's actions, at least one of his operating companies would be placed in to liquidation.

One creditor, who is owed more than £200,000, said: "The guys at Babushka sail fairly close but they have been very successful over the past 10 years. I believe they have been led by the nose on this - their enthusiasm has got the better of them. The whole situation stinks."