Rekom UK, the UK's largest nightclub operator, has filed a notice of intention to appoint administrators to a number of companies within its group. The group cited the effects of the cost-of-living crisis, particularly hitting the student and young adult market on which the nightclubs rely, together with supply-side cost pressures. 

Administration of certain entities will offer a means for the group to streamline its operations by ridding itself of underperforming sites, while retaining those companies and venues which remain profitable. Rekom is combining this restructuring with measures to cut costs and increase its focus on the most profitable events and locations in its remaining estate. Once appointed, administrators will most likely aim to offload the venues and brands comprised in the insolvent companies swiftly by way of a pre-pack sale. 

The Times notes that the group has been through two previous pre-pack administration sales, in 2011 and 2021. It acquired its current branding following a pre-pack purchase by the Danish nightclub group Rekom in the wake of the pandemic. 

The nightclub sector was one of the worst hit by Covid closures, with venues shuttered for almost 16 months. Over a third of nightclubs have closed since 2020, and a recent poll by the Night Time Industries Association (NTIA) of member businesses highlights the ongoing challenges faced by the sector. Notably, 70% of businesses surveyed reported adverse impacts on trading from industrial action during the critical run up to Christmas last year, and over 50% saw a year-on-year decrease in revenue for the same period. A quarter of respondents are projecting that they may only be able to sustain trading for two to three months in the absence of further support.

The NTIA is calling for targeted support for the sector in the Spring Budget, in particular advocating for a VAT reduction and restructuring of business rates or further relief to support the sector.