A UK chain of Italian restaurants backed by owners of Chelsea Football Club is in a legal battle with the taxman to restructure its debts.
Prezzo Investco Limited, which operates more than 100 pizza and pasta restaurants, is attempting a restructuring plan to avoid administration that would see it write off debts to landlords and tax authorities, according to a court hearing on Friday. The company is owned by Cain International, which was founded by Todd Boehly and is run by Jonathan Goldstein.
HM Revenue & Customs is objecting to the scheme, arguing that the restructuring is being used to avoid paying tax that Prezzo owes. The judge is due to decide next week whether the plan should go ahead and ignore claims from the likes of HMRC, which is owed more than £11 million ($14 million), using a process called a cram down.
“The company is essentially trading to the detriment of HMRC,” Charlotte Cooke, a lawyer acting for the tax authority, said in a filing. “The court should not sanction this non-payment of tax.”
The tax authority has objected to a number of similar restructuring plans in recent years, with varying levels of success. HMRC successfully challenged the restructuring proposed by the Nasmyth Group and Great Annual Savings Company earlier this year.
Prezzo has already had brushes with insolvency, including using a company voluntary arrangement to shutter stores in 2018. The business is owned by Jampurchaseco Limited, which is ultimately owned by Boehly and Goldstein. The two men have gained the spotlight since they bought Chelsea Football Club, one of England’s biggest sport teams.
The company’s secured lenders, who get paid first in a restructuring, are owed around £24 million, but Prezzo’s advisors at FRP Advisory think the business is unlikely to be worth more than £14 million. That leaves very little left over for the likes of the taxman. The vast majority of the secured debt is held by Prezzo’s parent company.
Around £32 million owed to landlords would also be compromised. Landlords have objected to other such plans and seen their dissent ignored by judges, including on Thursday in a ruling that saw Fitness First granted permission to enter into a restructuring.
