Bar Room Bar, the 16-strong bar business that was bought from Orchid in June 2007 and crashed into administration in April this year, is set to leave creditors out of pocket by around £16m, a report by administrator Zolfo Cooper indicates.
Ten Bar Room Bar sites were sold back to Orchid for £8.5m in June, but the company owes Allied Irish Bank £19.5m and Scottish & Newcastle £1.8m, both secured creditors. It also owes unsecured creditors a total of just over £3.2m, with this group likely to see the return of less than 1p in the pound.
The Zolfo Cooper report states: "Due to the level of combined secured creditor indebtedness exceeding the consideration for the business sale, the bank and Scottish & Newcastle will suffer a significant shortfall."
Zolfo Cooper reports that Bar Room Bar management, led by Tony and Ross Sanders, spent £1.2m refurbishing five bars between mid-2007 and early 2008, but the estate continues to underperform. In August 2008, one of the company's three freehold bars was sold to provide a cash flow injection.
The company lost £2.2m on a turnover of £8.6m in the 12 months to 23 August 2007. An estimated extra £600,000 of extra cash would have been needed to trade Bar Room Bar through to March 2010. The report shows that the cost of the administration as of 12 June this year was £361,781.