National Car Parks, the largest private car park operator in the UK, will fall into administration or liquidation if its debts aren’t restructured before the end of the month, lawyers for the company told a London judge today.
The company, which has been hit by disappearing revenues and pandemic-driven costs, is seeking court approval for a restructuring deal before it collapses under the weight of its debts.
Today, lawyers for NCP and some of its creditors met in an online court hearing, ahead of a three-day hearing set to take place towards the end of next month.
Acting on behalf of the company, Tom Smith QC said during the hearing that NCP has built up debts of £92m and has cash of around £15m. It has not been able to pay rent in December and March, leading to a shortfall of “around £116m” when payments are due at the end of June.
“The company is coming to a point of critical importance at the end of June… and without a plan there is no alternative to putting the company into administration,” said Smith.
Smith said that without a restructuring plan, the company would either have to go though a pre-pack sale, trading administration or liquidation.
He added that a deal has been negotiated that will give NCP £120m at an advantageous rate which will allow the payment of some of the company’s debts.
Smith said that the landlords, who owned the car parks, have been put in a different category from the other unsecured creditors and have been divided into three classes.
NCP intends to close 41 ‘Class C’ sites, which have been deemed loss-making and not profitable even under a reduced rent.
A further 29 sites fall under ‘Class B’, which Smith said were unprofitable, but would be profitable if they charged “ERV rent, which is market rate”. NCP will ask the landlords in this category to take a larger write-down and reduce their rent. They would have 60 days to decide whether to accept this or take the land back and accept a payment from NCP.
Landlords in ‘Class A’, comprising car parks that are currently profitable, will be asked to defer rent payments by three months and take a small write-down.
Lawyers for the landlords have not yet formally opposed the deal. However, David Allison QC, for one group of creditors and landlords, said his clients weren’t happy with the proposed deal.
“The plan underestimates the value of NCP,” he told the court.
The case is gearing up to be the latest in a string of disputes between high-street tenants hit by Covid, and their landlords. Landlord are increasingly becoming concerned that restructuring deals are running contrary to their interests.
Earlier this month, the courts ruled against landlords and approved restricting deals for gym operator Virgin Active and retailer New Look.
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