The billionaire Reuben brothers have put in a £40 million bid for Premium Bars & Restaurants (PBR) that would cause the troubled operator of the Living Room and Prohibition chains to undergo a pre-pack administration, The Times has learnt.

David and Simon Reubens, who hold a 32.5 per cent stake in the AIM-listed group, have offered to buy all but five of PBR’s 48 outlets. The offer would see shareholders lose all their money and the banks write off up to £10 million of debt.

The brothers, whose interests include Northern Racing, the racecourse operator, have indicated that they would remove the entire senior management and executives at PBR's head office in Hale, Cheshire.

They are also planning to seek a renewal of the bank facility for five years with a banking covenant holiday of three years. They have said that they will sell up to £10 million of assets to repay some of the debt.

Insiders said that the Reubens have also put forward an alternative proposal — a cash offer of £30 million, which would involve no debt except for a so-called payment-in-kind note of £10 million.

PBR, which in December asked for its shares to be suspended, has suffered severe financial difficulties after a slump in trading and has been in protracted talks with its bankers, led by Royal Bank of Scotland (RBS).

RBS gave the company a further 12 weeks' grace at the start of last month, provided it sought buyers for some or all of its assets, and BDO Stoy Hayward was appointed to canvass interest.

The Reubens are believed to be the only party still bidding for the whole company after the withdrawal of Mark Jones, the former PBR chairman, backed by private equity, and Ladhar Leisure, a bar and lap-dancing operator.

There has also been interest in some of PBR's individual businesses. Its Living Room operation is understood to have elicited an offer from Risk Capital, the private equity firm controlled by Luke Johnson, in tandem with Tim Bacon, the Living Room founder.

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