Rescue, Recovery and Closure Options for Festival Companies

In the UK, about 1,000 festivals happen yearly. They range from music, and cooking, to art festivals. These events add over £1.76 billion to the UK economy, mainly through music festivals. 

The live music sector employs 85,000 people, including promoters, organisers, and ticketing agents. It also draws spending from both domestic and international music tourists.

Music festivals come in various sizes and levels of popularity. From well-known events like Glastonbury, Creamfields, and Parklife to smaller ones like Kendal Calling, Beat-Herder, and Truck Festival. 

Even micro and budget festivals play a role in boosting local economies by attracting music tourists and supporting small businesses.

As per the Association of Independent Festivals, organisers typically invest £451,500 on average in planning festivals. Costs vary from £5,000 to £4 million for live music events, depending on their capacity ranging from 5,000 to 70,000 attendees

Starting such events demands a substantial upfront investment, necessitating considerable working capital to kick-start the festival.

A guide to closing a festival company via liquidation

If you’re a festival organiser facing cash flow issues, the unstable income flow could impact your business. If your live music or entertainment venture is struggling financially, seek advice from a licensed insolvency practitioner to discuss ways to rescue your festival business.

If your business lacks genuine prospects of recovery due to cash shortage and inability to settle creditor debts, company liquidation might be a viable option. 

Company liquidation is a formal insolvency process employed to resolve creditor matters and shut down the business.

This decision must be approached cautiously because closing your business will affect shareholders, suppliers, creditors, festivalgoers, and the local business community surrounding your festival sites, including hotels and restaurants.

However, various types of company liquidation procedures exist, including a Creditors’ Voluntary Liquidation (CVL), which might be appropriate for your festival and events business. 

Pursuing this route requires the guidance of a licensed insolvency practitioner.

A CVL is a voluntary company liquidation process designed to maximise funds for creditors. During this procedure, company assets, ranging from fixed assets like trailers, staging, and production equipment to intangible assets such as investments and intellectual property, will be independently valued.

After the sale of company assets and the distribution of proceeds to creditors according to the hierarchy specified in the Insolvency Act 1986, the business will be closed and deregistered from the Companies House Register.

The liquidation process must be managed delicately by an experienced licensed insolvency practitioner, especially in high-profile cases, as they could quickly draw negative publicity due to disgruntled creditors. As the director of your festival company, it’s your legal duty to prioritise the interests of creditors and seek insolvency support at the first signs of financial difficulty.

How do I rescue my festival company? 

Our licensed insolvency practitioners will assess whether your festival company can be saved through suitable restructuring processes, such as a Company Voluntary Arrangement (CVA) or Company Administration.

If your festival company needs a quick cash injection to facilitate growth, company finance may be accessible through competitive lenders collaborating closely with the Vanguard Insolvency team. 

We can secure a deal that offers value for money and enhances company cash flow, setting you on course to host a highly anticipated comeback festival as we emerge from the pandemic.

By facilitating recovery and restoring your business to a robust financial state, you can invest in your festival line-up, initiate marketing campaigns, and assure suppliers of your business’s health. 

This action can uphold the reputation of your festival and instil confidence in both performers and attendees to invest in your event.

If your festival business is cash-poor but asset-rich, entering company administration can help unlock asset value to generate funds for creditor repayments. 

If you’re facing significant pressure from creditors to make repayments, pursuing this route can stimulate company recovery. It can prevent your financial situation from deteriorating further and settle matters with creditors.