​Bird was “starved of cash” in lead up to administration

Fried chicken and waffle concept Bird was “starved of cash” according to administrators’ proposals from BM Advisory filed at Companies House this week.

Dirtybird Restaurants, which traded as Bird, appointed administrators on 12 August 2019, following issues with cash flow after Metro Bank made the decision to accelerate the timescale of the business’ £150k five-year debt facility, and remove its £100k overdraft facility last year.

Despite turnover increasing, and losses reducing between 2016 and 2017 – full year accounts for the year to 31 December 2017 showed turnover had increased from £2.98m to £4.03m and losses had reduced to £593.5k from £811.7k the previous year – the bank became concerned over the course of late 2017 and early 2018 with the performance of the company compared to forecasts.

The decision by Metro Bank coincided with the opening of Bird’s fifth site in Canary Wharf. Due to the lack of sufficient and readily available bank funding the company increased borrowing with YouLend, but daily repayments meant the business was “starved of cash” that it required to operate the business and maintain payments to creditors, said joint administrator Andrew Pear.

The directors continued to approach new lenders in January 2019, in an effort to refinance the YouLend facility. Discussions were held with a number of funders and specialist lenders as well as major banks, with the refinancing process running until March 2019, but it did not yield any results, “principally because of the funder’ view of the restaurant sector which at that time had suffered a number of high profile insolvencies”.

“The funding market for small and medium-sized business had effectively closed as a result of adverse the trading position in the restaurant and retail sectors in recent years,” said Pear.

The sale of the business was completed on 12 August to Inspirational Bar & Restaurants Management Ltd – a party represented by Paul Hemings, however he was not a director or shareholder at the time of the offer being received or the completion of the sale.

Business and assets were sold for the total consideration of £465k, with the Shoreditch site closed as part of the administration.