PRYZM closures: Firm behind bar and nightclub chain owed millions as it brought in administrators

An administrators' report released at the end of last week shows the company owed more than £100m to unsecured creditors but highlighted this involved "significant intercompany claims" relating to associated subsidiaries. A spokesperson for the company said the amounts relating to external unsecured creditors are expected to be "below £5m excluding future rents".

The company, which also runs ATIK bars, announced that PRYZM in Leeds would shut as part of the closures. Other Yorkshire sites run by the company including ATIK in Hull and Kuda in York, however, are to remain open.

Details on how much the company will be able to pay to those who are owed money are expected to be released as the administration process continues.

The documents also show that a pre-pack deal was agreed for £19.5m for the companies entering administration. These were bought by a new company with the same directors.

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The companies were first incorporated when Copenhagen-based Rekom Group bought Deltic - at the time the largest UK nightclub operator - out of administration in December 2020.

The latest administrator’s report shows that at the time of purchase, the companies were spending around £900,000 per month and had remained effectively closed due to the pandemic until July 2021, when restrictions were listed.

The report added: “The companies initially saw some profitable trading conditions after the covid restrictions were lifted. However, this initial spike soon dropped off as the novelty of loosened restrictions wore off and other industries, such as travel and festivals, began to open again.

“By January 2023, the directors had noticed that the companies (and the wider group of companies) were beginning to suffer as a result of post-covid changes to the way people go out and socialise, as well as the impact of the cost-of-living crisis, high inflation and energy process, the squeeze on personal finances and availability of disposable income, and reduced customer confidence.”

The report adds that revenue then began to drop as young people and students, who it says have been most affected by the cost-of-living crisis, could no longer afford to go out as often, and turned to drinking at home or spending in cheaper clubs and bars.

The report also noted that rising wages had been an issue for the firm.

It adds: “The hospitality sector as a whole has been directly affected by the cost-of-living crisis and wage-inflation. Wages across the sector account for a significant per cent of net income, so keeping up with wage increases has had a detrimental effect on the Companies profitability, with the wage bill increasing by around £2m per annum. The cost of goods, energy bills and music licensing has also increased dramatically to further impact on trading.”