Failed Midlands bar chain Bar Room Bar has been sold back to its previous owners after the company collapsed two months ago.
The chain, which has its flagship bar in the Mailbox and was run from an office in Solihull, was bought by Tony and Ross Sanders from the Orchid Group two years ago in a £20 million deal announced in a blaze of publicity.
But their venture was taken into administration in April after suffering from a lack of cash and it has now been sold back to Orchid for a sum that was undisclosed, but is believed to be significantly lower than the purchase price.
Three Bar Room Bar sites were closed when the chain went into administration, with the loss of about 50 jobs. The other ten – including the Mailbox bar and one in Stratford-on-Avon – were taken on by Orchid, a move they say will protect some 213 staff across the national chain.
Orchid itself has been through a tough time in recent years. The group went into administration and was then taken out through a pre-pack deal just before Christmas last year. Following a restructuring, the firm is now on the acquisition trail, with many distressed assets available in the troubled hospitality sector.
The purchase of the Bar Room Bar chain – which involves both branded and unbranded sites – takes the Orchid roster up to nearly 300 pubs and the management said more would be on the way, given the state of the market.
Rufus Hall, the chief executive of Orchid, said: “Acquiring these 10 profitable unbranded and branded businesses is absolutely in line with our strategy to lead sector consolidation. This is an exciting day for Orchid as this represents the first of many acquisitions to come, thus enabling us to continue to leverage our position as a leading player in the managed sector.”
Phil Kaziewicz, managing director of Orchid’s largest shareholder GI Partners, added: “We fully supported Orchid’s restructuring at the end of 2008, because we felt confident in the group’s ability to adapt and evolve the business in line with the current economic conditions.
“We are pleased to already be seeing the well thought-out strategy paying off; not only benefiting the Orchid Group but saving businesses and rescuing hundreds of jobs in the process.”
Administrators at Zolfo Cooper said they were pleased to have found a buyer for the chain of bars. Ryan Grant, director at Zolfo’s Birmingham office, and a joint administrator of Bar Room Bar, said: “We are very pleased to have been able to effect a sale of this business preserving some 213 jobs across the ten bars, which were traded whilst the company was in administration.”
The previous incarnation of Bar Room Bar was started in summer 2007 by Tony and Ross Sanders, backed by a group of employees from a company that used to own Bar Room Bar, with significant funding from Birmingham’s financial sector.
It had been set up with ambitious expansion plans in mind, but was hit hard when the hospitality market took a downturn, caused by a recessionary drop in consumer demand, meaning the group ran out of cash.
