On 15th January 2024, Rekom UK filed a notice of intent to appoint an administrator with the UK courts. Signaling the effective business failure of the UK’s largest nightclub and bar operator. This leaves its creditors and staff facing an uncertain future.
Rekom UK operated upwards of 45 sites across the UK, including the popular Atik and Pryzm brands, and stated a turnover of £64.9 million in their last set of filed accounts. They are part of the Danish nightlife giant Rekom Group Holdings ApS that operates over 150 nightclubs and bars across the continent. As yet, it is only the UK arm of the business that is entering administration and facing possible insolvency.
Red Flag Alert customers enjoyed four months of forewarning of the credit risk presented by Rekom UK as early as September 2023, allowing them to chase debts and refuse credit ahead of the market.
Hospitality, especially bars and nightclubs, were among the worst affected by lockdowns. As, unlike restaurants, they were unable to diversify their revenue streams during that period. The post-COVID years have been no easier, with inflation, interest rises, rising costs, and a cost of living crisis to contend with, many nightlife companies have had no choice but to close their doors.
For Rekom UK, the steep rise in energy costs, rising drinks prices, and wage increases had serious detrimental effects; but it was the cost of living crisis that had perhaps the worse effect. Rekom UK’s target customers were primarily younger people (18-25), who keenly felt the increased cost of living and reduced their spending on hospitality as a demographic.
It is not the first time these brands have entered administration, with them formerly operating as the Deltic Group. Deltic entered into administration during 2020, mainly due to the effects of COVID, and Rekom purchased their bars and nightclubs as a way to penetrate the UK market.
Peter Marks, the chairman of Rekom UK, said ‘ while the government’s Autumn 2023 Statement saved us £120,000 on our £5 million rates bill, it meant that we had to find an extra £2 million in wages. Not only that, the costs of goods and energy have also seen inflation-busting rises. This has led to us having to accept that the group cannot continue in its current structure.’
During it’s three-year period of operation, Rekom UK only filed accounts for their first year of operation in 2021. This showed a turnover of £64.9 million and a post-tax profit of £4.1 million. It is likely that the following two years saw poor performance, as being delinquent in filing accounts is a key sign of poor results and rising levels of distress.
It is uncertain if any elements of the group can be saved, but creditors of Rekom UK must now prepare themselves for bad debt and the risk of insolvency that this presents to themselves.
Red Flag Alert were able to identify this risk and warn our customers in advance due to our unique approach to data. We do not just analyse if a company is suitable to offer credit to but look at the larger underlying financial health and risk of failure. To do this we use up-to-the-minute data and our cutting-edge algorithm that is based on decades of financial data and expertise in business finance health. This has allowed us to become the industry leader in identifying insolvency early, with a market-leading 92% rate.
Red Flag Alert offers a complete business risk and credit referencing solution that protects businesses from bad debt and empowers decision-making by demystifying data reports and keeping our customers ahead of their competitors. Our cutting-edge platform contains detailed but easy-to-understand reports on all UK and 350 million+ companies, an advanced B2B Prospector tool, a customisable monitoring tool, and a fully digital AML compliance tool.
To see how Red Flag Alert will help your business, download our free CC STIM UK TOPCO LTD (Trading As Rekom UK) company report below or get a free trial today.