The company has struck a Company Voluntary Arrangement which will see some of the firm’s estimated £1bn debt pile written-off by the banks and landlords take a cut in their current rents.
At least £75m of new money will be injected into Travelodge with £55m earmarked for a major refurbishment programme across the estate covering over 11,000 rooms and 175 hotels.
The refurbishment programme will start in early 2013 and continue through to summer 2014.
Travelodge said the restructuring would not affect current suppliers and contractors who will “continue to be paid as normal.”
Travelodge CEO Grant Hearn said: “The financial restructuring, including the CVA, will leave Travelodge in a much stronger position going forward and will ensure a long-term, sustainable future for the business.
“Once this joint process is completed, Travelodge’s debt, interest costs and lease liabilities will be significantly reduced.
“This new appropriate level will provide greater security for our staff, suppliers, landlords and developers.
“This is a successful brand with millions of customers and the Company will emerge in excellent shape from this process.”