Rescue, Recovery, and Closure Options for Bars and Nightclubs
The night-time industry is worth £66 billion and employs over 1.3 million people nationwide. Rising National Living Wage, persistent staff shortages, and constantly shifting consumer tastes have led to growing liabilities for companies and mounting pressure on this crucial sector of the economy.
If your business is facing financial difficulties, and pressure from creditors, and cannot sustain its operations, you might need to explore insolvency options. A certified insolvency practitioner can determine the most suitable path to ensure a smooth closure and resolve outstanding matters with creditors.
If your business lacks sufficient income or cash flow to keep operating, company liquidation could be an appropriate option.
How to close a bar or nightclub via the liquidation process?
A Creditors’ Voluntary Liquidation (CVL) is a formal insolvency process instigated by the company shareholder/director to wind up the business.
A licensed insolvency practitioner will oversee the sale of company assets, such as property, equipment, machinery, and stock. After realising the value of these assets, the proceeds will be distributed to creditors in a predetermined order of priority.
Instead of liquidating your company, another option is to transfer ownership of your bar or nightclub to a willing buyer.
You might sell either a portion or the entirety of your business if it holds value, but the feasibility of this approach depends on various factors. A member of the Vanguard Insolvency team can assist in evaluating the available options for your bar and club.
Entering company administration could be a viable choice if your bar or nightclub is insolvent and encountering growing pressure from creditors.
Seeking early assistance from a licensed insolvency practitioner is crucial as it enhances your chances of recovery and expands the range of options available to you. The insolvency practitioner will assist you in navigating the liquidation process to close your bar and nightclub and clarify how it will affect employees and creditors in the future.
If there’s a chance of recovery, your chosen insolvency practitioner will consider restructuring the company as a potential solution.
How can I rescue my Bar & Nightclub business?
If your bar and nightclub business is under financial strain, facing pressure from creditors, and unable to meet existing liabilities, a licensed insolvency practitioner can offer guidance on the most suitable path to salvage your business.
There are several recovery options available, including company administration, company restructuring, or seeking alternative finance, all of which can assist in restoring your business to stability.
If your business is finding it difficult to meet financial obligations because of inadequate cash flow, a Company Voluntary Arrangement (CVA) could be an appropriate path to aid in your recovery. A CVA or Fast-Track CVA is a formal insolvency procedure that entails reaching an agreement with creditors to restructure liabilities into manageable instalments.
By reducing the burden of your current financial obligations, your bar and nightclub business has the greatest opportunity to regain a profitable position.
As an alternative to a CVA, Company Administration offers a formal insolvency procedure that can facilitate recovery and handle outstanding matters with creditors. This process shields your business from legal actions by creditors, providing essential breathing room to plan without the threat of a winding-up petition.
Company Administration involves transferring control to the appointed licensed insolvency practitioner, who serves as the administrator. Their objective is to either rescue the company as a going concern or secure a more favourable outcome for creditors compared to winding up the company without first entering administration.
Commercial Finance offers a cash injection for your business, aiding in restocking, attracting customers, and sustaining supplier relationships. Eliminating cash flow constraints allows you to reinvest in your business, settle outstanding debts, and maintain successful operations. Various forms of commercial finance products exist to help you achieve your specific objectives.
Unlocking redundancy guidance for directors of bars and nightclubs
As the director of your bars or nightclub business, if your company goes into liquidation, you might qualify for director redundancy if you hold employee status. You’re eligible to claim director redundancy if your business has been operating for two years or longer, and you decide to pursue the liquidation or administration route due to insolvency.
Apart from director redundancy, you might also be eligible to claim statutory entitlements like holiday pay, notice pay, and unpaid wages.
It’s a widespread misunderstanding that directors are ineligible for redundancy pay. Yet, similar to any other employee in your bar and nightclub business, you may qualify for redundancy.
Director redundancy is supported by the Redundancy Payments Service (RPS), with payments sourced from the National Insurance Fund.
A claim for director redundancy can be lodged either before or after liquidation, but it must be within 12 months of your business entering the liquidation process.
To be eligible, you must work a minimum of 16 hours per week for your bar and nightclub business, hold an employment contract for at least two years, and have consistently received a salary through PAYE.