The Burning Night Group, the Leeds-based bar operator, has been placed into administration, MCA understands.
Begbies Traynor has been appointed administrator by crowdfunding platform Crowdstacker, which is the main secured creditor of Burning Night.
MCA understands c900 investors, who have made £7.5m in peer-to-peer loans to Burning Night, have been told the news by Crowdstacker.
The problems are understood to have been caused by a number of cost headwinds, including duty and business rates, as well as broader economic uncertainties creating cash flow issues at the group.
BurningNight closed its Bierkeller in Cardiff in August due to financial losses caused by lower than expected turnover.
Another catalyst was the failure of a BurningNight subsidiary Cornertrack, which had a notice to appoint an administrator, and was a guarantor to the P2P loan.
BurningNight sought replacement security, but this resulted in further creditor pressure across the group, with Crowdstacker taking the decision to enforce its security and appoint an administrator, with a winding up order placed on BurningNight and BurningNight Services.
Potting Shed Trading, and Firepit Smokehosues, which operate the Potting Shed and Firepit concepts, and a joint partnership with Downing LLP and some directors of Burning Night, are unaffected.
Authentic Alehouses, a pub development company led by Burning Night chief executive Allan Harper, is also unaffected.
Crowdstacker has told investors a sale will be sought for the venues – in Birmingham, Cardiff, Manchester, Nottingham, Liverpool and Leeds – to recoup capital and interest accrued.
MCA understands a number of potential buyers are in talks about buying the estate, which include large footprint, three venues in one, city centre locations
An independent valuation of the main large trading bars, undertaken in December 2016, valued them on a fair value basis at £8.8m.
Revenues for the Burning Night group are understood to have increased from £17m to over £25m from the 2016-17 to 2017-18.
Precis
The Burning Night Group, the Leeds-based bar operator, has been placed into administration, MCA understands.
Begbies Traynor has been appointed administrator by crowdfunding platform Crowdstacker, which is the main secured creditor of Burning Night. MCA understands c900 investors, who have made £7.5m in peer-to-peer loans to Burning Night, have been told the news by Crowdstacker.
The problems are understood to have been caused by a number of cost headwinds, as well as the closure of its Bierkeller in Cardiff due to financial losses caused by lower than expected turnover. Another catalyst was the failure of a Burning Night subsidiary Cornertrack, which had a notice to appoint an administrator, and was a guarantor to the P2P loan.
Potting Shed Trading, and Firepit Smokehosues, which operate the Potting Shed and Firepit concepts, a joint partnership with Downing LLP and some directors of Burning Night, are unaffected. Authentic Alehouses, a pub development company led by Burning Night chief executive Allan Harper, is also unaffected.
Crowdstacker has told investors a sale will be sought for the venues – in Birmingham, Cardiff, Manchester, Nottingham, Liverpool and Leeds – to recoup capital and interest accrued. MCA understands a number of potential buyers are in talks about buying the estate, which include large footprint, three venues in one, city centre locations.
An independent valuation of the main large trading bars, undertaken in December 2016, valued them on a fair value basis at £8.8m. Revenues for the Burning Night group are understood to have increased from £17m to over £25m from the 2016-17 to 2017-1
