Mulholland has written a letter to Punch executive chairman Stephen Billingham claiming: “The concerns are that if Punch Taverns are forced into administration, with or without a debt restructure, there will be insufficient funds to reimburse or transfer deposits to new freeholders and the tenants will become junior unsecured creditors to Punch in administration, while having a continual obligation to fund a new security deposit with a new freeholder.”
He has also raised an Early Day Motion in the House of Commons on the issue.
Restructuring proposals
However, Billingham has written back to the MP claiming that: “The board believes that the restructuring proposals which we announced on 15 January 2014 will, if implemented, provide a robust platform for our business going forward.
"In particular, they will ensure the current structure of the Punch Group is preserved, and deliver a materially better position for all stakeholders than a default in either or both securitisations - something that is clearly in the interests of our partners.”
Commercial reality
Billingham said that while it was “technically possible” for members of the wider Punch group to be subject to administration proceedings the commercial reality is that it would be in the interests of any administrative receiver to return partners security deposits. He said an administrative receiver would need to consider whether any actions could prejudice its ability to find licensees to lease its pubs.
He said that failure to do so would risk “irreparably damaging” the reputation of the business.