Leon launches two-year CVA proposal as pandemic hits trading

Restaurant chain Leon has launched a company voluntary arrangement (CVA) proposal to try and secure the future of the business.

As first reported by Sky News, the group is launching a restructuring plan after the coronavirus pandemic hit trading.

A spokesperson for Leon confirmed it has informed landlords it is seeking a CVA and said the company had done "all it could to negotiate Covid-19".

Leon's 44 company-owned sites in the UK are primarily located in city centres and transport hubs. During the second lockdown in England it has seen a 70% reduction in sales compared to the same period last year.

It is understood that there are no closures planned as part of the CVA, but instead the company is looking to move the bulk of its restaurants to turnover-based rents.

John Vincent, founder and CEO of Leon said: "The CVA is intended to provide the company with a foundation to first survive and then carefully rebuild.

"We had a growing and profitable business before Covid. Despite taking many actions to reduce cost and optimise revenue during the crisis, the continued lockdowns and restrictions have made this CVA a necessity."

As part of the package Leon's shareholders will invest £3m into the business if its cash reserves fall below £2.25m for more than 28 days.

The CVA will last for two years, by which time it is hoped trading will be close to normal levels.

Quantuma is overseeing the process, and creditors will vote on the plan in mid-December.

Leon is backed by two principal investors, GP Investments and Active Private Equity. The company was launched by Vincent, Henry Dimbleby and chef Allegra McEvedy in 2004 on London's Carnaby Street.

A number of other high street restaurant chains have undergone CVAs since March, including Wahaca, PizzaExpress, Busaba and YO!