What is a CCCD? Now it sounds like a condition for which you may need to take antibiotics, however its a ‘cross-class cram down.’
Does that imply a bunch of public schoolboys attending a fancy dress party as painters and decorators? Er no, it’s a bit more serious than that.
The ability of a company like Stonegate to seek a CCCD has been described as the most significant development in English restructuring law since schemes of arrangement were introduced in 1870.
The law in England was changed in June 2020 (Corporate Insolvency and Governance Act) and the first restructuring plans were sanctioned by a Mr. Justice Trower on 13 January 2021.
An example of CCCD in operation was River Island when the Court agreed to amongst other factors to thirty three closures and seventy one amended lease terms
So the provisions allow struggling companies, as well as their creditors or members, to propose a new restructuring plan between the company and creditors and members. The measures will introduce a “cross-class cram down” feature that will allow dissenting classes of creditors or members to be bound to a restructuring plan.
Re-negotiate terms
This means classes of creditors or members who vote against a proposal, but who would be no worse off under the restructuring plan than they would be in the most likely outcome were the restructuring plan not to be agreed, cannot prevent it from proceeding.
So ‘struggling’ Stonegate can seek to re-negotiate terms with the landlords of the pubs they occupy as tenants/lessees or seek a court CCCD ruling that may remove objections from a minority (a minority is around less than 25%, but its complicated) Seems all above board. Or is it?
For those tied tenants who have the right to a free of tie MRO (market rent option) I always advise to ensure you have the option not necessarily to go free of tie but to maximise your negotiation position.
There is no doubt the ability of a company such as Stonegate to now access ‘CCCD’ enables them to suggest or cajole (is threaten too strong a word?) their current landlords to accept their proposals maybe for lower rents or even a lease surrender or run the risk of a worse outcome by a court CCCD ruling.
CCCDs are influenced by ‘Chapter 11’ bankruptcy legislation from the USA. Now has a certain American businessman ever used this legislation? Yes, Donald Trump has on at least four occasions involving properties in Atlantic City. Donald Trump and Stonegate, I am not going there!
Charlie Wright of Morgan Clarke, acting for some landlords of Stonegate pubs, confirmed: “The reason CCCD is being considered over a CVA (voluntary agreement) is leverage and certainty.
“With Stonegate itself pointing to tough market conditions and a reported 22% decline in like-for-like profit in the managed estate, it’s understandable they’re stress testing leasehold viability. The irony is many of the same factors get downplayed when Stonegate is wearing its landlord hat in rent negotiations.”
The background to all this is the acquisition by Stonegate of Enterprise Inns in 2020.
Enterprise Inns came into being as a result of the Beer Orders when they were founded in 1991 after purchasing 368 pubs from Bass Mitchells and Butlers.
They were not the most salubrious. Indeed my quip at the time was how do you tell an Enterprise pub? Its the one with the M&B sign falling down. As the Midlands Senior Licenced Victuallers Officer, I was invited over to meet the MD (CEOs hadn’t been invented then) Ted Tuppen after their launch at their Solihull HQ.
“What is he like?”, my old colleague Tony Payne CBE enquired
“Totally charming but knows f**k all about pubs! He wont be here next year”, I incorrectly predicted.
“They have done a U-turn and the future is not in managed houses but in leased and tenanted and the self employed percentage of take model."
Phil Dixon
In the early part of this century, usually attending Parliamentary Select Committees, the odd MP would ask how Enterprise make millions.
I would then relate a fanciful, almost but not true story, about a BII member in Lincolnshire who had the late Geoff Capes attend on a charity fundraising evening.
Geoff had knocked over the pennies, lifted the staff two at a time on bar stools then reached out behind the bar and took a lemon.
Holding the lemon in his right fist he exclaimed: “I am Geoff Capes, Britain’s strongest man. After squeezing for all his might he then held out the piece of withered fruit and asked: “can anyone here get any more out of this?”
“I think I can”, said a voice at the back of the bar and this well dressed individual approached Geoff took the fruit and there was moisture everywhere!
“Who on earth are you?” enquired the respected Olympian and Commonwealth champion
“I am Ted Tuppen chief exec of Enterprise Inns and I am Britain’s expert at squeezing a lemon at both ends”. And by 2006, it was a fact.
With more than 9,000 pubs Enterprise were beyond powerful, dictating prices to suppliers and milking the profits from the prices they were forcing publicans to pay and deciding what brands they could stock.
They loved full repairing leases with full ties. I once revisited a bit of stand up claiming there was a deleted scene from the film ‘The Godfather’ ‘where a Mafia Lieutenant tries to explain the Enterprise agreement to Don Corleone, who concluded it was way too far fetched to be true!
Ted, always charming, became a classic industry ‘Beerage’ owner with a 4 x 4 car and would even bring his dog Max to work -Max and I had a thing. Actually Max and my left leg had a thing but I think we should leave that there.
Ted did not like ‘managed houses. Stonegate saw an opportunity in many Enterprise pubs to convert them, especially in the south of England, to their managed estate. So they paid an astronomical amount and almost immediately Covid hit.
Complete U-turn
Now they have done a U-turn and the future is not in managed houses but in leased and tenanted and the self employed percentage of take model (Craft Union).
When Enterprise bought Unique in 2004, I asked a former Unique Licensee of the Year the difference between the two companies.
“The Unique BDM would ask how can I help grow your business? The Enterprise BDM just wants to inspect the cellar.” Checking for buying out, he responded.
So where are Stonegate today? if leased and tenancy is the future, well they are way bottom of the league according to the Pubs Code Adjudicator (PCA) Fiona Dickie.
As of 2025 they have a 43% satisfaction rating down from 47% in 2024 and 50% in 2023. Miss Dickie is very unimpressed but Stonegate does not seem to care.
A major factor of discontent is the prices they charge. A former publican, Jake Hall, recently had his pub closed by Stonegate.
Hall of ‘Ye Olde Foundry’ in Dudley told the press he was being charged £64 for a bottle of spirits he could buy for £19 at Tesco. No doubt there was a lot more going on here to warrant the closure but the price of the bottle of spirits I thought has got to be an exaggeration.
Alas a former Stonegate Exec informed me it was the case and she felt the company on pricing to be “morally corrupt”! The issue for myself is with a full tie and this level of pricing it has to completely affect the relationship.
You cannot have, in my opinion, a successful tenanted and leased estate if the relationship is not about business development but is all about tie compliance. There is nothing even approaching any form of partnership to be had in Stonegate at the moment.
The one aspect of comfort is Stonegate highlighting how current challenges are well known.
From my brief four decades, and the rest, experience, when you try to raise ‘current challenges’ with a pubco representative during a rent review discussion they look totally astounded and then pontificate there are more ‘green shoots’ than at a Giant Panda’s birthday party, how specific areas are up on last year and we appear to be on the verge of ‘turning the corner’. You have more chance of finding a corner on a Roman road!
Stonegate need to drop the hypocrisy. The same principles should apply when they are either the landlord or the tenant/lessee.
