Passionate Pub Co put into liquidation

Passionate Pub Company, the seven-strong operator based in Billingham in north-east England, has gone into liquidation after its bank RBS withdrew its support.

The company has called on legislators to "see the consequences of their actions on a beleaguered but important sector of the economy".

Passionate, which has traded since 1999, said it had been severely affected by the smoking ban, changes in the market with the move towards food sales, and price competition from supermarkets.

It is understood that the liquidator has returned six Enterprise leases and a Mitchells & Butlers franchise.

Passionate, led by Jan Sowa with Alistair Arkley as chairman, ran 26 pubs at one stage, but had a major re-structure a couple of years ago.

A spokesman for the company stated: "Trading has been difficult over the last three years and, despite a successful turnaround working with our landlords and bank in 2008 to cut costs and concentrate on a smaller number of more profitable pubs, the market has continued to drop, especially in the sector within which we trade and in the northern geography.

"More recently, we worked to restructure the debt and continue with the business, so that in the long term all the creditors including the bank were paid in full and our obligations under the lease agreements were met.

"We sought support from our main landlords Enterprise Inns and also Mitchells & Butlers to make for a workable plan.

"Enterprise Inns has already supported us to the extent that it has substantially reduced rents and increased discounts on all the pubs to a level which it believes reflects the fair market arrangement, and Mitchells & Butlers has also provided rent reductions.

"However, the company needed further support through the winter to create a viable long-term plan and made a formal request to Enterprise Inns which is our main landlord.

"Its response did not reject the request but, given that time was of the essence given poorer than expected trading, a fall-back position was needed.

"We recognised that, in the pub sector within which we operate which is experiencing severe declines, the higher fixed cost of the managed model may now be less appropriate for some of the outlets.

"In our subsequent discussions we understood that provided the bank's position did not worsen, then an orderly wind down of the business would be preferable as the fall-back.

"Enterprise Inns has been very supportive of this approach, and we believe that the proposal to evaluate the net assets and sell them in an orderly fashion would realise more value for all the stakeholders.

"However the bank decided that it could not support that concept without immediate "clear evidence" of an improving position. The directors felt they were not in a position to give this evidence without the benefit of evaluation of the assets, and regrettably the bank withdrew the facility.

"Whilst the directors are naturally very saddened by the situation, and in particular in respect of the staff who have worked very hard in our outlets, they feel that the company's position is more a reflection of unprecedented changes in market conditions within the pub sector over the last two or three years than as a consequence of the actions of any of the parties involved, all of which have tried hard to deliver a satisfactory solution.

"It is hoped that the policy makers and the legislators can see the consequences of their actions on a beleaguered but important sector of the economy."