Chilango sold out of administration

By James McAllister

- Last updated on GMT

Chilango sold out of administration

Related tags Administration Restaurant CVA Mexican cuisine Bond Restructuring

Burrito chain Chilango has been sold out of administration in a deal that will safeguard around 130 jobs.

City AM​ reports that the chain told investors today (27 August) that administrators RSM had secured a buyer for the business.

RSM confirmed this afternoon the the chain had been sold to Investment group RD Capital Partners following a competitive sale process.

The rescue deal secures 10 of Chilango’s 11 restaurants.

Managing director Richard Franks, who took over running the business in February, will continue to lead Chilango.

Gordon Thomson, joint administrator, RSM said: “Despite the commendable support provided by the government, the pandemic and associated lockdown measures have presented significant challenges to the casual dining industry.

"This deal, together with the backing of RD Capital Partners, secures 130 jobs and will allow the Chilango brand to grow.”

Chilango filed a notice of intention to appoint administrators last month​, having slipped into insolvency as a result of the enforced lockdown of the hospitality sector. 

Prior to the pandemic, though, the group was already facing significant financial struggles, and had gone through a Company Voluntary Arrangement (CVA)​ at the tail end of last year.

Rescue measures included slashing rents at three of its 12 restaurants; and exiting four leases on dormant sites.

Chilango was founded by former Skype employees Eric Partaker and Dan Houghton in 2007.

It had raised £5.8m from around 1,500 retail investors through two mini-bonds, dubbed ‘burrito bonds’, in 2014 and 2018, which allowed investors to purchase some of the company’s debt for a set period of time, in exchange for fixed interest payments.

As part of the CVA restructuring process, investors were offered the choice between a debt-for-equity swap or a settlement of bondholders’ debts at 10p per pound invested.

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