Regus, the struggling serviced offices provider, yesterday became the first publicly quoted British company to file for protection under Chapter 11 of the US bankruptcy code.
The group was forced into the move after it failed to persuade its American landlords to slash rental agreements. Its US business is losing between £2m and £2.6m a month.
The filing covers only its US liabilities and is expected to cost Regus up to $50m (£31m) to settle claims from creditors. The move protects the whole group from legal action from the disgruntled landlords, which Mark Dixon, Regus' founder and chief executive, admitted had looked "highly likely". Mr Dixon, a former hotdog salesman who has seen his one-time £600m paper fortune disappear as Regus's trading woes have mounted, said: "We could not get all the landlords to agree to a negotiated settlement. We wanted to avoid anyone taking unilateral action." Mr Dixon owns 63 per cent of the business.
Regus, which is being stalked by the US investment firm Indigo Capital, said Chapter 11 was the "quickest and most reliable route" to return its US business to profitability. It will allow it to reduce crippling rental agreements, struck during the height of the dot.com exuberance, to current, lower market rates. Most of the group's 87 buildings in the US are on the West Coast, which has borne the brunt of the collapse of the New Economy bubble.
Mr Dixon said he hoped to emerge with a smaller, profitable US business within 12 months. Under Chapter 11, landlords can claim a maximum of one year's rent or 15 per cent of the remaining contracted sum over a total of three years. Regus expects to fund this with cash from its profitable UK operation.
The group, which was worth £2.2bn at its peak, also has up to £57m at its disposal, which it was forced to raise in December to stave off bankruptcy in the UK by selling a majority stake in its UK business to the venture capital group Alchemy Partners. It does not expect further funding to be necessary.
On the subject of Indigo Capital, Mr Dixon said: "There are no bids. There's nothing here at all. When and if they want to have meaningful discussions we'll make ourselves available." Regus shares rose 4p to 24.25p.
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