Company debt advice for pubs

To safeguard your pub from increasing expenses and evolving consumer tastes, learn about formal insolvency processes to either rescue or shut down your hospitality venture. 

Explore options like Company Voluntary Arrangements (CVA), Company Administration, or Creditors’ Voluntary Liquidation (CVL).

An Ultimate Guide To Rescue, Recovery, and Closure Options for Pubs

As the cost of living goes up, people are more cautious about how they spend their money. With less cash available after covering essential expenses, businesses selling non-essential goods and services are competing for a shrinking share of customer spending. 

While some businesses will manage to maintain adequate sales to keep going, others may need professional assistance to address their situations.

If you’re thinking about restructuring your company or contemplating permanently closing your pub, it’s crucial to fully grasp all your options before making any decisions.

As a pub owner, you might be anxious about the future of your business and the available options. Depending on your pub’s financial status and future outlook, several rescue and recovery plans can be considered. However, if you think your pub cannot be salvaged, closing the company and opting for liquidation may be necessary.

How Can You Close your Pub Through liquidation? 

This is accomplished through a formal insolvency process called Creditors’ Voluntary Liquidation (CVL). During the liquidation of your pub, all assets will be sold, and the proceeds will be distributed to creditors based on a specified priority order.

 This procedure will be overseen by a licensed insolvency practitioner whom you will appoint to manage and coordinate the liquidation.

Placing a pub into liquidation marks the last resort for insolvent establishments. However, in many instances, this represents the most suitable choice for all parties involved when financial distress becomes overwhelming. 

Liquidating your pub enables the business to be closed down in an organised fashion, protecting creditors from additional losses and ensuring that you fulfil your legal duties as the director of an insolvent company.

If you’re thinking about closing your pub through liquidation, seeking guidance from a licensed insolvency practitioner as soon as possible should be a priority. An insolvency practitioner can discuss your options with you and determine whether liquidation is the most appropriate course of action.

They can also explore options for improving your business’s financial situation through either restructuring or refinancing processes.

Rescuing your pub business [Explore All Effective Processes!]

If your pub is currently facing difficulties, but you think it can be revived, several business rescue and recovery options might help you achieve this goal. This could entail negotiating with creditors to lower your monthly expenses and alleviate immediate pressure, securing emergency funding to improve cash flow, or initiating a formal insolvency process such as administration while a path forward is devised.

For a turnaround strategy to be implemented, your pub must be viable, indicating it has a strong chance of future profitability and sustainability. 

A Company Voluntary Arrangement (CVA), for instance, is a legally binding payment arrangement between an indebted company and its creditors. It enables the company to lower its monthly debt repayments while providing creditors with a greater chance of recovering some of the owed amount.

For a CVA to be put into effect, a minimum of 75% of creditors (by value) must consent to the arrangement and the proposed repayment amount. 

Given that a CVA usually spans between 3 to 5 years, creditors are inclined to approve the process only if they are assured that the company can sustain the proposed repayments throughout the arrangement period.

If creditors have any uncertainty about the company’s ability to keep operating, they may reject the proposal and advocate for an alternative process, such as liquidation.

Our licensed insolvency practitioners can promptly assess whether rescuing your pub business via a restructuring strategy like administration is feasible. If viable, we’ll guide you in understanding which procedure best suits your specific situation and explain its implications for both your pub and your creditors.

If your business is operationally sound and you just require a capital injection to fill a financial gap stemming from lockdown restrictions, seeking third-party funding could offer a solution.

Our proficient commercial finance team can secure emergency funding and private equity finance from various reputable providers. We’ll thoroughly explore the market to ensure you access the most suitable funding option at the best possible price.