On a dull January Saturday, before England relaxed the Covid restrictions, the Wolseley restaurant on London’s Piccadilly was so crowded with customers sipping oysters before lunch that there were only standing places in the bar.
It did not look like a company on the verge of insolvency.
But this week, Corbin & King, which owns Wolseley and eight other restaurants, was thrown into the administration of its majority shareholder, the Thai hotel group Minor, which said the company faced “large liquidity constraints” and demanded “strong financial support”.
The announcement sparked panicked phone calls from guests with reservations, fearing Wolseley would be shut down forever.
Less was aware that the restaurants would continue to operate as normal. But its move is the latest sign of a bitter battle for control of a group of restaurants that counts TV chef Nigella Lawson and fashion designer Paul Smith among a long line of glittering customers. Joan Collins once declared Wolseley’s Souffle Suisse the best meal she had had in London.
Minor, which took a 74 percent stake in Corbin & King in 2017, wanted to reduce 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 has reached a headline about Corbin & King’s default of £ 33 million in loans to Minor, a hospitality group that operates around 2,300 restaurants in Asia and 520 hotels worldwide.
“In a decent investor situation, if they just rolled on [loan] and let’s build the company we would not be insolvent, ”King said.
He went to YouTube this week to tell customers that the company was “under siege” from its investor, but the restaurants were in “rude health”.
He told the Financial Times that trading had been volatile, but the company’s earnings in the past seven months were higher compared to the same period before the pandemic.
Minor said it would not be “drawn into a war of words” and that its “main purpose has been and always will be its commercial success”.
Like all restaurants in central London, Wolseley, housed in a high-ceilinged former car showroom at the Ritz, has a bit of a hard time under Covid. The foothold in the city center is only gradually recovering after the government’s work from home ended this week.
Corbin & King’s venues, which also include Delaunay on the Strand and Colbert on Sloane Square, have been closed or traded under restrictions for most of the past 22 months.
King, who ran major London eateries, including Langan’s Brasserie and The Ivy, before starting Corbin & King with his business partner, Chris Corbin, in 2003, has been outspoken against many Covid measures. In an email to customers, he called the level system announced in October 2020 “another knee-jerk, ineffective, window-spreading, ass-covering initiative that has not been properly thought through”.
In 2020, the group’s like-for-like sales fell by 58 percent according to its most recently submitted financial statements. Its loss before tax increased from DKK 4.9 million. GBP in 2019 to 10.3 million. GBP, while revenue almost halved to 22 million.
Nor has it been an easy pandemic for Minor. In 2018, it bought the Spanish hotel group, NH Hotels, for DKK 2.3 billion. EUR – an ambitious effort that expanded the company’s former Asia-focused portfolio by around 380 hotels, most of which were leased rather than self-owned.
When the pandemic set in, NH had to raise more debt to meet its rental obligations. Despite reduced spending, in the first quarter of 2021 it averaged € 29 million. in monthly losses.
The CEO of another international hotel group described Minor chairman Bill Heinecke as “an aggressive and growth-oriented businessman”, adding that “the NH Hotel journey has been the most difficult [transaction for them]”.
Minor denied that NH Hotels had strained its finances, saying “we will continue to invest in our business where appropriate”.
When Minor acquired its stake in Corbin & King, part of its investment was DKK 58 million. GBP 20 million loan note. GBP with maturity in 2024. The hotel company also took out a loan of DKK 13.25 million. GBP, which Corbin & King owed HSBC and could not pay back when it arrived. due in May 2020 – during the UK’s first Covid lockdown.
Minor initially assured King and the company’s auditors that it would not invoke the bank loan, King said, but later it also triggered the £ 20m loan repayment.
It has also branded some of Corbin & King’s brands in Singapore against King’s wishes, according to two people close to King, while its offer to recapitalize the company came with strict ties that meant King relinquished some control.
Minor said “there are great opportunities for expanding Corbin & King into key international markets” and that it had suggested that King retain “customer-facing aspects” of the company while managing the corporate side.
King, who has long fought against Covid as well as disputes with Wolseley’s landlord and the company’s insurance companies, tried this month to use a newly introduced legal moratorium to protect the company – a move that Minor said was “unauthorized” and prompted it to file application for administration. .
The restaurateur has sued alternative backers, the American investment firm Knighthead, which recently helped car rental firm Hertz avoid bankruptcy.
A person with knowledge of Knighthead’s strategy said the fund had repeatedly offered to refinance Corbin & King’s debt over the past year, but had been turned down. “You can not place an asset that Jeremy has in a three star hotel,” the person said.
It is now up to the administrators of FRP Advisory to foresee the future of the restaurant group. As the main creditor, Minor has taken over, but may face having to pay more than the value of the debt to retain control of the company if there is competition to buy it.
Nick Jones, CEO of Soho House, and a regular at Corbin & King’s restaurants said there would be “a queue” of interested parties: “It’s a great business, but it would have to have Jeremy.”
Additional reporting by Antoine Gara in New York