Crosstown sold for just £500,000 after racking up £3m in losses

According to an administrators’ reports, the brand was loss-making for several years as a result of difficult trading conditions driven by a reduction in demand for premium products and the impact of supply side cost inflation.

The management team had been implementing a turnaround plan focused on cutting costs and repositioning the brand for the past year.

Despite these actions taken by the directors to address the challenges facing the business, trading continued to be challenging.

While it was historically a strong period of trading before the summer period, in the four months to April 2024, the business accumulated losses of £200,000.

Management attributed these losses to the ongoing reduction in commuters following the pandemic and the impacts of an inflationary trading environment, which all significantly impacted Crosstown’s ability to generate positive operating cash flows.

However, despite the support of certain trade creditors, without a significant improvement in market conditions, the company was ultimately unable to address the challenging trading conditions and secure any further investment or funding, which led to unsustainable cash challenges and creditor pressure.

Without further funding, the company was unable to meet its debts as they fell due and therefore continuing to trade into the short, medium or long term was not considered a viable, or an appropriate option, by the directors.

At the date of Interpath’s appointment, the company operated across 30 sites, mostly based in London, which were made up of 12 stores, seven trucks and the remainder marketplaces, kiosks and concessions.

The business had an annual turnover of approximately £8m and employed a total of 152 staff.

The ownership of the company was split between private equity investor Foresight (23.1%), co-founders Jian-Peng ‘JP’ Then (17.4%) and Adam Wills (17.4%), as well as around 25 minority shareholders (42.1%).

Interpath Advisory was formally engaged by Crosstown on 2 April 2024 to advise on the options available and to run an accelerated process to explore the sale, investment, refinance and restructuring options available.

A marketing process generated interest from a number of parties on a variety of bases, with 17 parties expressing an interest and signing a non-disclosure agreement, though following further due diligence, only one offer was deliverable.

One other offer was received from parties connected to the company, however this offer was subsequently withdrawn and therefore was not deliverable.

After taking independent legal advice, the directors resolved to file a Notice of Appointments (NOA) on 5 June 2024 with Will Wright and Steve Absolom appointed as joint administrators of the company.

The joint administrators said the value achieved represent better value for creditors than the alternative insolvency options, and achieves the best outcome for creditors in the circumstances.

Karali Snacks Limited is an unconnected special purpose vehicle incorporated by Karali Group to facilitate the transaction​​.

The buyer paid £0.5 million for the business and certain assets of 22 sites, including three head office sites operated by the company.