On a dull Saturday in January, before England eased Covid’s restrictions, Piccadilly’s Wolseley Restaurant in London was so crowded with oyster-eating customers before noon that the bar had only room for standing.
It didn’t look like a business on the verge of bankruptcy.
But this week, Corbin & King, which owns Wolseley and eight other restaurants, was plunged into the administration by its majority shareholder, Thai hotel group Minor, which said the business was facing “severe liquidity constraints” and needed strong financial support “.
The announcement sparked panicked phone calls from guests with reservations, fearing Wolseley would be shut down forever.
Minor was clear that the restaurants would continue to operate normally. But his move is the latest in a fierce battle for control of a group of restaurants that rank TV chef Nigel Lawson and fashion designer Paul Smith on a long list of sleek clientele. Joan Collins once named Wolseley soufflé the best dish in London.
Minor, which took a 74% stake in Corbin & King in 2017, wanted to cut costs during the pandemic and expand the Wolseley brand worldwide. Jeremy King, founder and CEO of Corbin & King, wants to retain control of the company he started and focus on a small number of openings in London and one in New York.
The battle erupted over Corbin & King’s default on £ 33 million in loans owed to Minor, a hospitable group that manages some 2,300 restaurants in Asia and 520 hotels worldwide.
“In a situation of a decent investor, if you are just moving [loan] and let’s build a company where we won’t be insolvent, “King said.
He took to YouTube this week to tell customers that the company was under siege by its investor, but the restaurants were in “rough health.”
He told the Financial Times that trade had been volatile, but the company’s profits had been higher in the past seven months than before the pandemic.
Minor said she would not be “involved in a war of words” and that her “main goal has been and always will be the commercial success of her business.”
Like all restaurants in central London, Wolseley, housed in a former high-rise car dealership next to the Ritz, was badly damaged during Covid. Steps in the city center are recovering only gradually, after the government’s work on home orientation ended this week.
Corbin & King, which also includes Delaunay on the Strand and Colbert in Sloane Square, has been closed or traded with restrictions for most of the past 22 months.
King, who ran London’s multi-storey dining rooms, including Langan’s Brasserie and The Ivy, before Corbin & King started with business partner Chris Corbin in 2003, was open against many measures for Covid. In an email to customers, he called the tier system, announced in October 2020, “another knee initiative, ineffective, window-covering, butt-covering initiative that has not been properly thought out.”
In 2020, the group’s sales fell by 58 percent, according to the latest bills. Its pre-tax losses increased from £ 4.9 million in 2019 to £ 10.3 million, while turnover fell by almost half to £ 22 million.
It was not an easy pandemic for Minor either. In 2018, it acquired the Spanish hotel group NH Hotels for 2.3 billion euros – an ambitious bet that expanded the company’s portfolio, previously focused in Asia, with about 380 hotels, most of which were rented rather than vacant. property.
When the pandemic began, NH had to take on more debt to meet its leasing obligations. Despite spending cuts, the first quarter of 2021 saw an average of € 29 million in monthly losses.
The CEO of another international hotel group described Minor’s chair Bill Heineke as an “aggressive and growth-oriented businessman”, adding that the trip to the NH Hotel is the most difficult [transaction for them]“.
Minor denied that NH Hotels had strained its finances and said that “we continue to invest in our business where appropriate”.
When Minor bought its stake in Corbin & King, part of its £ 58 million investment was a £ 20 million loan due in 2024. The hotel also took out a £ 13.25 million loan that Corbin & King owed of HSBC and could not pay when it came to be expected in May 2020 – during the first blockade of Covid in the UK.
Minor initially assured King and the company’s auditors that he would not ask for the bank loan, King said, but later did so, triggering a £ 20 million loan note to repay.
According to two people close to King, it is also traded with some of Corbin & King’s brands in Singapore against King’s wishes, while his proposals to recapitalize the company come with fixed terms that include King relinquishing some control.
Minor said that “there are great opportunities to expand Corbin & King in key international markets” and that he suggested that King keep the “customer-oriented aspects” of the business while running the corporate country.
King, who has long battled Covid, as well as disputes with Wolseley’s landlord and the company’s insurers, this month tried to use a recently imposed legal moratorium on business protection – a move Minor said was “unauthorized” and prompted to apply for administration.
The restaurateur is courting alternative supporters, the American investment firm Knighthead, which recently helped car rental company Hertz avoid bankruptcy.
A person familiar with Knighthead’s strategy said the fund had offered to refinance Corbin & King’s debt several times over the past year, but was turned down. “You can’t put an asset like Jeremy in a three-star hotel,” the man said.
Now the administrators of FRP Advisory must monitor the future of the restaurant group. As a major creditor, Minor has an advantage, but may have to pay more than the value of the debt to maintain control of the company if there is competition to buy it.
Nick Jones, CEO of Soho House and a regular visitor to Corbin & King’s restaurants, said there would be a “queue” of stakeholders: “It’s a great business, but there has to be Jeremy.”
Additional reports from Antoine Gara in New York