The four-strong group, which latterly operated under the names Tiptoptap Limited and Late Night Watford Limited, was placed in administration with Duff & Phelps on 2 August and has emerged under three companies: Gatecrasher (Birmingham) Limited, Gatecrasher Clubs and Bars Limited, and GLN Trading Limited.
Duff & Phelps Report:
A report from Duff & Phelps says that the companies made an operating loss of £1.1m in the period from 1 June 2012 to 31 March 2013. “Recessionary economic factors and continued competition in certain locations put pressure on bar prices and entrance fees. This made it difficult to maintain attendance levels causing the companies to incur losses.”
The report says there was a “breakdown in relationship” in 2013 between the companies and their bank, Barclays, which asked them to find alternative banking arrangements “as the parties had differing options on how the companies should proceed”.
In view of the differences, the sole director of companies, Simon Raine, completed a refinance with Cable Finance Limited. At the date of a refinance on 11 July, Barclays was owed c£3m, a figure that was also subject to accruing interest and charges.
“The companies owe in excess of £500,000 to HM Revenue & Customs and together with its other creditors, was unable to pay its debts as and when they fell due. The directors concluded that the companies should be placed in administration.”
Duff & Phelps said a formal insolvency process was required in view of the companies’ financial position. “The joint administrators negotiated a sale of the companies’ business and assets on a pre-packaged basis and together with their solicitors agreed the terms of a sale and purchase agreement.”
Liquidation was discounted as this would have resulted in redundancies and an increase in preferential and unsecured claims.
“In addition, the valuation of the companies’ tangible assets was greater on an in-situ basis achieved through the pre-packaged sales [£281,000 against £115,400 ex-situ]. There would have been no realisations for goodwill or leasehold improvements in a liquidation scenario as a result of the cessation of trade, which therefore would have been detrimental to creditors.”
Duff & Phelps also said there were “insufficient funds” to enable the business to continue to trade in administration. The rights over the trading names of the companies was not owned by them, but rather they were owned personally by Simon Raine. In addition, the physical assets of the largest site in Birmingham was no longer owned by Tiptoptap.
The “inherent risks and licensing issues associated with nightclubs” means it was “deemed inappropriate to trade in administration”, and there were concerns about trading in summer, the “poorest trading period for the clubs”.
“It was therefore concluded that the pre-packed sales was the best option for the companies and creditors as a whole in order to maximise the value available to creditors.
The assets of Tiptoptap Limited, which included the goodwill of the sites plus other assets and the value of improvements, totalled £880,000. Those of Late Night Watford Limited, which held the trademarks, was valued at £20,000.
Gatecrasher was founded in the early 1990s, originally as a club night and later developed into one of the original ‘super clubs’ of the late-1990s. In 2007 its site in Sheffield was destroyed by fire and there were plans to re-open in the city.