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Closure advice for Pub Landlords

Company debt advice for pubs

How can you protect your pub from rising costs and changing consumer preferences? Understand formal insolvency procedures to help save or close your hospitality business, such as a Company Voluntary Arrangement (CVA), Company Administration or Creditors’ Voluntary Liquidation (CVL).

Rescue, Recovery, and Closure Options for Pubs

With the cost of living rising, discretionary spending is becoming a more carefully considered process for consumers than ever before. With less money left over after paying necessary bills, those companies which offer non-essential products and services are fighting over an ever-reducing customer spending power. While many will still generate sufficient sales to allow trade to continue, other situations will require professional intervention.

If you are exploring your options for restructuring the company, or even if you’re considering closing your pub for good, it is vital you understand all of your options before you commit to one particular course of action.

If you own a pub, you may be concerned as to what the future holds for your business and what your options are at this time. There are a number of possible rescue and recovery strategies which can be explored depending on the current financial position of your business and its likely future prospects. If you believe your pub is beyond the point of rescue, however, you may need to consider closing the company and placing it into liquidation.

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Close your Pub via liquidation

This is achieved through a formal insolvency procedure known as a Creditors’ Voluntary Liquidation – or CVL. As part of the liquidation of your pub, all assets will be sold with the proceeds distributed to outstanding creditors according to a designated order of priority. This process will be managed by a licensed insolvency practitioner who you will appoint to oversee and coordinate the liquidation.

Putting a pub into liquidation is the final straw for insolvent establishments, yet in many cases this is the best option for all concerned once financial distress has reached unmanageable levels. Liquidating your pub allows for the business to be wound down in an orderly manner, shields creditors from further losses, and ensures you are fulfilling your legal responsibilities as the director of an insolvent company.

If you are considering closing your pub through liquidation, taking advice from a licensed insolvency practitioner at the earliest available opportunity should be a priority. An insolvency practitioner will be able to talk you through your options and understand whether liquidation is the most suitable route to take.

They will also be able to explore options for turning around your business’s fortunes through a process of either restructuring or refinancing.

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Rescue my pub business

If you know your pub is currently struggling, yet you believe the situation can be turned around, there are a variety of business rescue and recovery options which may be allow you to do this. This may involve negotiating with creditors to reduce your monthly overheads and ease immediate pressure, accessing emergency funding to boost cash flow, or placing your pub into a formal insolvency process such as administration while a route forward is planned.

In order for a turnaround strategy to be deployed, your pub must be viable – that means it must have a good chance of future profitability and longevity. For example, a Company Voluntary Arrangement (CVA) is a legally-binding payment plan entered into by an indebted company and its creditors. It allows the company to reduce its monthly debt repayments while giving creditors a better chance of recovering at least a portion of the amount owed.

In order for the CVA to be implemented, at least 75% of creditors (by value) must give their consent to the arrangement and proposed repayment amount. As a CVA typically lasts between 3-5 years, creditors are only likely to agree to the process if they are confident the company in question will be able to keep up with the proposed repayments for the duration of the arrangement. If they have any doubt as to the company being in a position to continue trading, it is likely creditors will reject the proposal and push for an alternative process such as liquidation.

Our licensed insolvency practitioners can quickly ascertain whether it will be possible to rescue your pub business through a restructuring strategy such as administration. If it is, we will help you understand which procedure is the most appropriate for your individual circumstances and talk you through what this would mean for both your pub and your creditors.

If the business is operationally sound, and you simply need a capital injection to plug a financial gap caused by lockdown restrictions, sourcing third-party funding could be a solution. Our expert commercial finance team are able to source emergency funding and private equity finance through a number of competitive and trusted providers and we will scour the market to ensure you can access the most appropriate form of funding at the best price possible.

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