Moore Stephens administrates indebted night-club chain

23 March 2018 Authored by Consultancy.uk

Moore Stephens has been appointed the administrator to the company behind four clubs on the same street in Norwich. The future of Mercy, Rocco's, Flaunt and Lace remains uncertain, after Code Red Promotions called in liquidators, having racked up over £400,000 in debts to the Norwich City Council.

Norwich-bound revelers were greeted with the sobering news that a sizable chunk of the city’s night-club scene now faces closure. Liquidators were called in to Code Red Promotions – which owns the bars Mercy, Flaunt, Lace and Rocco’s restaurant on Prince of Wales Road – at the end of February.

Professional services firm Moore Stephens has since confirmed Jeremy Willmont and Lee Causer have been appointed joint-administrators by the High Court under the Insolvency Act, coupled with a winding up petition presented by Norwich City Council for non-payment of business rates. A statement from the firm said it was assessing the company’s financial position “in order to decide whether the clubs can continue to trade under their supervision”, and would be in discussions with management regarding its future.

Moore Stephens administrates indebted night-club chain

Prince of Wales Road has become infamous nationally for its heavy police presence and high drink-related crime rate in recent years. In 2015, the street was named as the fourth most dangerous drinking spot in the UK, and the reputation of the location means that public reaction to the potential collapse of four clubs synonymous with the Prince of Wales experience has been mixed at best.

While the opinions of some were summarised by an online commenter, “Great club I’m sure it will bounce back,” others speaking to the local press were less forgiving. One said it was the “best news I’ve heard in ages”, with another telling the Eastern Daily Press, “This has to be good news for Prince of Wales Road.

Public cost

The potential cost to the public purse goes beyond damages resulting from disorderly behaviour, however. When Code Red first entered administration, the figure owed to the Council was thought to be “in excess of £200,000,” according to a Moore Stephens spokesperson. Problematically, it has since emerged that the owner of the nightclub group was also behind another company which failed 14 months before – owing the council £220,000.

Norwich City Council has since announced that it will write off Project Zeus’ £220,000 debt. However, it is continuing to work toward recovering the remaining £200,000 owed to it by Code Red. Moore Stephens is yet to release a public statement on the progress of the liquidation, following the revelation.

Documents which emerged in March, originally filed at Companies House, showed Code Red owner Ibrahim Peri had previously been involved with a company called Project Zeus, which went into liquidation in December 2016. His mother Dawn Peri was also listed as a director for both companies – with Code Red Promotions purchasing the assets of Project Zeus during its own liquidation for £23,580 on February 24, 2017. According to a report in January from Project Zeus’ own liquidator Nick Cusack, of Parker Andrews, no funds were ever received for the purchase.

Meanwhile, a third company, Zonebond, also listed Peri as a person with significant control. It likewise went into liquidation, with documents showing it owed £168,822 to HM Revenue and Customs at the time, before its assets were similarly sold back to Peri. In total, the trio of collapses could cost tax-payers over £500,000 via the Norwich City Council and HMRC – meaning that while the practice of “Phoenixing” in this manner remains legal, due to its capacity to allegedly save jobs, it has come in for stringent public criticism in relation to Code Red.

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