Coconut Tree restaurants sold out of administration, safeguarding over 150 jobs

More than 150 jobs have been secured after Sri Lankan restaurant group The Coconut Tree was sold out of administration to a company linked to two of its founders, in a development closely watched across the hospitality sector.

MPS Hospitality Limited, incorporated earlier this year by co-founders Shamil Fernando and Praveen Thangiah, has acquired the business and assets of the seven-site group. The deal allows all remaining restaurants to keep trading, according to administrators Forvis Mazars.  

The Coconut Tree entered administration last week after defaulting on a £1.6 million tax bill. The collapse followed a challenging period for the business, which had entered a Company Voluntary Arrangement last summer. At the time, the group had also launched a £1 million crowdfunding campaign aimed at scaling the brand to 50 restaurants, signalling ambitious growth plans that ultimately proved unsustainable.  

Administrators described the sale as the best possible outcome for employees and creditors. Joint administrator Mark Boughey said rising costs, shifting consumer behaviour and wider economic uncertainty continued to weigh heavily on hospitality operators, contributing to deteriorating trading conditions for restaurant businesses. He said the agreement preserved jobs while supporting an orderly outcome for all classes of creditors.  

The Coconut Tree was founded in Cheltenham in 2016 by Fernando, Thangiah and three friends, and expanded from a small pub operation into a regional brand with eight sites at its peak. Its portfolio has since contracted, with restaurants now operating in Reading, Oxford, Cheltenham, Bournemouth, Bath and Bristol. A Cardiff branch closed last year.  

Industry observers note that the group’s difficulties mirror pressures across the sector. Rising wage costs, energy volatility and persistent supply chain challenges have added financial strain for operators of all sizes, while discretionary spending remains fragile. The Coconut Tree’s turnaround comes at a time when hospitality businesses continue to face increased scrutiny over tax compliance and debt management.

This latest development follows earlier reporting on 12 November 2025, when it was confirmed that The Coconut Tree had fallen into administration amid mounting tax debt. That report highlighted the scale of liabilities facing the group and signalled uncertainty about its future. Today’s sale provides a measure of stability, though analysts caution that longer-term recovery will depend on market conditions and the group’s ability to rebuild financial resilience.