Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360, London (January 8, 2021, 4:46 PM GMT) -- Yo! Sushi was ordered by a court on Friday to hand over a report prepared by property advisors Savills to one of its landlords, who is challenging the restaurant chain's decision to shut sites losing money because of the COVID-19 outbreak.
Raquel Agnello QC, sitting as a deputy judge at London's insolvency and companies court, said that Yo! Sushi UK Ltd. must give Lazari Properties 2 Ltd. the sections of the Savills report relevant to the Lazari lease and any assumptions of the site's financial viability. He concluded that such disclosure would have to occur "at some point" in the proceedings.
The judge also ordered Lazari to prepare a document offering more detail about its claim that it was treated unfairly so that Yo! Sushi knows and can respond to the case against it.
Yo! Sushi, which launched in London in 1997 and built its brand on serving Japanese cuisine on conveyor belts, proposed a Company Voluntary Arrangement in August. It wants to close 19 sites that it says are no longer financially viable because of unsustainable rental costs and the trading disruption caused by the coronavirus pandemic.
The CVA was approved by 86% of Yo! Sushi creditors in September, according to Richard Fisher QC, counsel for the restaurant chain. Fisher denied Lazari's claims that Yo! Sushi had been "unhelpful or unreasonable" in refusing to hand over the documents sought, telling the judge that the company had to know what the case against it is.
Lazari Properties had sought further information from Yo! Sushi, including copies of leases and documents from Savills and consultant Deloitte setting out forecasts for performance and future rent, as well as agreements on the handling of the chain's brand.
Stefan Ramel, counsel for the landlord, said that the restaurant chain should have all that information "easily to hand." It would help Lazari to build a picture of the analysis that was carried out to categorize some branches as viable and others not, Ramel added.
But Judge Agnello agreed with Yo! Sushi that it was a "disproportionately wide request." She confined the disclosure to the parts of the Savills report that concern the Lazari sites.
Creditors have only 28 days to challenge a CVA, and Lazari said it received the chain's proposal "very late in the day." However Lazari did not attend the subsequent meeting of creditors or ask for it to be adjourned, waiting instead until after it filed its challenge to ask for the documents, the judge said.
Yo! Sushi said Tuesday that 36 of its restaurants across the U.K. remain temporarily closed following the government's announcement of a further national lockdown due to the rising number of COVID-19 cases. It will keep 14 open for delivery and takeaway service.
Several other companies have recently headed to court to get restructuring plans signed off using CVAs because of the pandemic and the business interruption it has caused. They include Travelodge, Pizza Express and New Look.
Lazari Properties is represented by Stefan Ramel of Guildhall Chambers, instructed by Freeths LLP.
Yo! Sushi is represented by Richard Fisher QC of South Square, instructed by Travers Smith.
The case is in the matter of Yo! Sushi, case number CR-2020-003360, in the High Court of England and Wales.
--Editing by Ed Harris.
Correction: An earlier version of this story misattributed counsel details for Lazari and Yo! Sushi. That has been corrected.
For a reprint of this article, please contact email@example.com.