Mexican Chain Las Iguanas Faces Bankruptcy, 47 Restaurants at Risk

Why this matters: The potential bankruptcy of Las Iguanas highlights the broader challenges facing the restaurant industry, including inflationary pressures and changing consumer behavior. This situation could foreshadow similar struggles for other restaurant chains.

Iguanas Holdings Limited, the operator of Las Iguanas, has sought court approval for a restructuring plan to avoid administration. The plan involves creditor meetings and potential debt restructuring. The Big Table Group, which has been funding the chain's operating losses, is seeking a resolution to the financial strain.

According to Ryan Perkins, the lawyer for the restaurant chain, the U.K. casual dining sector has suffered 'substantial problems' in recent years, caused by factors including high inflation, reduced customer spending, and increased taxes.

The restructuring plan seeks to address £37m owed to a single creditor, with Big Table pledging £3m in new funds. It also imposes rent reductions and compromises on landlord debts, argued to be better than the returns from administration.

The failure of this plan could result in the liquidation of the chain. The situation reflects a wider trend, with restaurant insolvencies in the U.K. increasing by 46% due to rising costs and decreased consumer spending, according to the Insolvency Service. Mazars, an audit firm, cites inflation and rising costs as key factors impacting the hospitality industry.

Administration is a formal insolvency process where an independent licensed insolvency practitioner takes control of a struggling business to try to rescue it, sell it, or achieve a better outcome for creditors than liquidation.

Not always. In some cases, restaurants continue trading while administrators attempt a sale or restructuring. However, closure of underperforming locations is common.

Do you think Las Iguanas will survive this crisis? What measures can restaurants take to thrive in this challenging environment? Share this article with others who need to stay ahead of this trend!