Updated: 8th January 2021
Although very few sectors were immune to the damaging effects of the nationwide lockdown earlier this year, some industries have found themselves able to bounce back from the period of business interruption better than others.
Unfortunately for those running theatres, community centres, arenas, conference centres, and concert halls, the road to recovery looks set to be a long and challenging one. While other sectors were given to go-ahead to resume trade, venues which catered to entertaining crowds and hosting live events were left in a state of limbo as restrictions remained.
While grants have been offered by the government, theatres are all too aware that this is just a temporary measure; in order to guarantee survival, they need to be attracting audiences and generating their own revenue again. As the furlough scheme is wound down, many are fearful for the future.
This is a problem affecting both regional and national venues, of all sizes.
Theatres have been offering refunds to customers for shows that are not going ahead, yet many have been hoping customers take up the offer of tickets to rescheduled performances, or a credit note, which would allow for funds to be retained within the company. However, many trepid theatregoers have opted for the refund option with concerns over when, or even if ever, the rescheduled performance will happen. This has left theatres with decimated cash flow, forced to repay customers with no certainty that they will be able to commence performances in the near future.
Outdoor performances were announced, yet plans were subsequently dropped. With no clear indication of when normal service will be permitted to resume. So long as social distancing measures are in place, the outlook appears bleak for those industries which rely on mass gatherings and group bookings.
Weddings are limited to small gatherings, while indoor performances are facing logistic challenges of their own. This does not only put pressure on the venues themselves, but also threatens the livelihood of those who rely on these types of events going ahead. The knock-on effects are huge, with caterers, entertainers including actors and musicians, cleaners, riggers, among many others finding themselves with empty order books.
To cap off a disastrous year, many theatres are already cancelling their pantomime season, a decision which has been taken in advance due to the scale of preparation which is required for such a performance. Many simply cannot take the financial risk that social distancing regulations meaning they can only be performed in front of a vastly reduced audience, or even that they may be cancelled entirely.
Pantomime season is often the biggest income generator of the year, popular with both families and also school group bookings. In many cases, panto season provides theatres with the financial boost they need as they head into the new year. Without this to look forward to, many venues are planning for an equally challenging 2021 where they may still be dealing with the fallout caused by the Covid-19 coronavirus.
If you run a theatre, community or conference centre, music or wedding venue, and are concerned about what the future may hold post-Covid-19, you are strongly advised to seek help at the earliest possible opportunity. If you wait to take advice until your problems reach breaking point, you may find that liquidation is the only option available. However, there will be many more avenues open to you if you take timely advice.
There are a range of company rescue options which may help to get your establishment back on a solid financial footing after the disruption caused by the coronavirus lockdown. A formal rescue procedure such as a Company Voluntary Arrangement (CVA) could allow you to restructure your outstanding liabilities by entering into a legally-binding agreement with your creditors. Depending on the amount you can afford to pay back, some debt may be written off with the remainder being repaid at a more manageable rate. A CVA typically runs for 3-5 years, providing you with a level of certainty when it comes to your outgoings, allowing for better financial planning.
If you are being pressured by creditor threats of litigation following Covid-19 challenges, placing the company into administration could provide you with the breathing space you need to work out a plan going forward without the fear of legal action.
Any formal insolvency rescue procedure will need to be entered into under the guidance of a licensed insolvency practitioner. By arranging a consultation with your local Real Business Rescue insolvency practitioner, you can learn more about your options and understand the best course of action for yourself and your company going forwards.
If you feel the problems caused by the Covid-19 coronavirus crisis have taken your company beyond the point of rescue, you may be considering placing your theatre, venue, or arena into liquidation. This may be the only option left if your debts are at an unmanageable level and your company is unlikely to be able to generate the revenue needed to service these borrowings.
As part of the liquidation process, all company assets will be sold and the proceeds will be distributed amongst creditors. Any other debt which remains – except any which has been secured with a personal guarantee – will be wiped out and the company will be dissolved. Company liquidation is a serious step to take so you should ensure you have taken sound advice from a licensed insolvency practitioner before going ahead.
Real Business Rescue have over 70 offices located up and down the country, meaning that no matter where in the UK you are based, you are never far from expect help and advice. You can arrange a free no-obligation consultation with your local Real Business Rescue insolvency practitioner by calling our team on 0800 644 6080.
13th October 2021
The Bank of England has said it anticipates that rates of corporate insolvency will increase in the coming weeks following the removal of restrictions on winding up petitions.Read More