Las Iguanas seeks High Court restructuring to avert liquidation as UK dining sector faces insolvency surge

Las Iguanas Holdings Limited has formally applied to the U.K. High Court for a restructuring plan under Part 26A of the Insolvency Act to avoid entering administration. The operator, which runs 47 locations across the United Kingdom, faces a critical deadline of 5 June for creditors to approve the proposal. Failure to secure this approval would leave the company with no funding to continue trading, risking the shutdown of 44 at-risk restaurants.

The financial distress stems from a perfect storm of economic pressures affecting the hospitality industry. Since the pandemic, labour and food costs have risen by 35%, while insurance, utility bills, and taxes have also increased. According to the National Restaurant Association, these extra costs have severely eroded profit margins. Attempting to pass these expenses onto customers has proven unviable; data from the James Beard Foundation indicates that establishments raising prices by more than 10% have seen customer numbers and profits decline sharply.

To bridge the gap, the parent company, The Big Table Group, has pledged £3m in new funds to support the restructuring. The plan specifically targets a £37m debt obligation owed to a single creditor. It also includes provisions for rent reductions and compromises on landlord debts, which the operator argues will deliver a better outcome for creditors than the returns likely to be achieved through administration. Creditor meetings were convened on 28 May to vote on the proposal, with the scheme returning to court for final sanction on 5 June.

The situation reflects a broader crisis within the U.K. casual dining sector, where insolvencies have jumped 46% in the last year. The Insolvency Service notes that high inflation and a downturn in consumer spending are the primary drivers of this trend. Paul Maloney, associate director at Mazars, highlighted that many restaurants are beset with challenges well outside their control, struggling to keep their heads above water.

If the restructuring plan fails, the company risks liquidation. While businesses do not always close immediately upon entering administration, the process involves an independent licensed insolvency practitioner taking control of the company to attempt a rescue or sale. In practice, this often leads to the closure of underperforming locations, a fate that threatens the majority of Las Iguanas' sites if the current funding arrangement collapses.