Exclusive: Bust burrito chain Chilango sold out of administration
Burrito chain Chilango has today been sold out of administration after the Covid-19 pandemic finished off the already struggling business, Morning Wire can reveal.
The Mexican-themed fast-food chain told investors today 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 and preserves around 130 jobs.
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.”
Earlier, in an email to investors seen by Morning Wire, Chilango said: “We had worked extremely hard to mitigate the pandemic’s impact, operating as much as is safely possible, while implementing any government measures that have been available to us. We are deeply saddened that these efforts were not sufficient to secure the future of Chilango as it exists today,”
The company, which crowdsourced £5.8m from around 1,500 small investors through its so-called burrito bonds, was struggling with rising operational costs and mounting debts even before the coronavirus pandemic ground much of the restaurant industry to a halt.
Chilango’s creditors passed a company voluntary arrangement (CVA), news of which was first reported by City A.M., in January. Rescue measures included slashing rents at three of its 12 restaurants and exiting four leases on dormant sites.
Under the CVA, investors who backed Chilango’s mini-bond offerings were offered a stark choice between having their investments converted into debt-like shares in the company or receiving 10p per pound they originally invested.