Takeaway Business Closure and Rescue Options
Takeaway businesses operate in a highly competitive and constantly changing market. As that market continues to evolve and customers demand more unique, higher quality food, economic pressures coupled with high running costs can cause issues for what are usually small companies without a wealth of resources. If your takeaway is experiencing financial issues and you want to turn the situation around, seek insolvency advice to explore potential options for business recovery or closure.
This guide is designed to help you navigate the complexities of insolvency, with practical advice specifically tailored for takeaways. With the right knowledge, you can make informed decisions about the future of your company, whether it involves restructuring, refinancing, or winding down operations.
Common financial challenges for takeaway businesses
We can help advise on financial issues your takeaway business may face. These could include, but are not limited to:
- Running and commission costs
Prices of rent, energy, and maintaining equipment can take a significant chunk out of a business’ finances, as can the cost of paying staff and buying in ingredients. Trade from third-party delivery apps may contribute to takings and require commission fees or surcharges for continued use. We can offer tailored advice if your company cannot cover its liabilities. - Traditional and internet competition
The takeaway market is saturated, with sit-down restaurants entering the market by offering takeout meals, and various delivery apps adding to competition. These additions can be difficult to compete with or stand out from, potentially leading to lower profit margins. We can help break down your options if this is threatening your company’s chances of survival. - Change in customer spending habits
Customers may cut back on disposable income, which may include what they spend on takeaways during tougher economic times. Additionally, inflation can impact these costs, meaning takeaways will either have to pass this cost onto customers or lower their profit margins. Contact us if a downturn in customers has negatively impacted the business’ financial standing before it threatens its future. - Bounce Back Loans (BBL)
The government initiative of Bounce Back Loans were very important during the pandemic. However, companies are now having trouble repaying them. We can give you advice on what options you have when it comes to repaying the loan and how a BBL would be treated in various insolvency options.
How we can help rescue your takeaway company
Your options to rescue your takeaway business depend on whether the business is incorporated in a limited company or if you trade as a sole trader. Below are two formal insolvency procedures, which would allow a takeaway business in a limited company to continue trading whilst being protected from creditor action:
- Repaying company debts through a Company Voluntary Arrangement (CVA)
A CVA is a formal repayment plan that allows companies to repay their unsecured debts in instalments tailored to what the company can afford monthly. This would include managing property and lease negotiations with landlords. It would allow an insolvent takeaway business operating through a limited company to continue trading and to retain all the company’s goodwill and reputation with customers whilst protected from legal action. CVAs typically last five years, and once concluded, any remaining unsecured debt is written off.
More on a Company Voluntary Arrangement - Restructuring the company through administration
If your company’s situation requires more substantial restructuring, directors can explore administration. A licensed insolvency practitioner will act as an administrator while trying to return a takeaway business operating through a limited company to a profitable state. Administration is a temporary state wherein the company is protected from creditor pressure, giving the administrator the ability to restructure the company into a potentially more profitable operation.
More on administration
How we can help close and liquidate your takeaway company
If your takeaway company is insolvent and creditor pressure has reached a level which means the business cannot continue to trade, the liquidation of your takeaway company would draw a line under its operations and write off its unsecured debts.
- Close your takeaway down via a Creditors Voluntary Liquidation (CVL)
A CVL is a formal insolvency process designed for companies that are insolvent and have unmanageable debt. The process would close your takeaway, stopping any further payments and writing off any unsecured debts and arrears. If eligible, employees and directors will be able to apply for statutory entitlements such as redundancy and holiday pay. If the company cannot afford to pay staff entitlements, claims can be made through the Redundancy Payment Services.
More on a Creditors Voluntary Liquidation - Close your takeaway down and start again via a pre-pack liquidation
A pre-pack liquidation is an informal term for a type of liquidation where a newly formed company pre-purchases the assets of an existing company that is then liquidated. This allows you to close your takeaway while continuing its business in a new company without any unsecured historical debts. You can also transfer your employees to the new company under TUPE regulations, ensuring their continued employment. In some cases, you may be able to reuse your company’s trading name, but this can be complex. We can advise you on these processes if they would be beneficial.
More on pre-pack liquidation
Commercial finance for takeaway businesses
If the company has an otherwise healthy cash flow, but a large, upcoming payment risks pushing it into the red, commercial finance could be a viable solution. There is a range of finance options that could help cover a one-off expense or a gap in the company’s incoming payments. Speak to us for a more detailed breakdown of which commercial finance options best fit your company.
More on commercial financeHow to get in touch with us: The next steps
If your takeaway is insolvent and cannot pay its liabilities as and when they fall due, it’s important to understand the different closure and recovery options available. Our initial advisers will offer a comprehensive explanation of the different options available to you, and our experienced consultants will look at tailoring our processes to your business’ circumstances.
Contact our initial advisers, who can advise you on your company’s solvent position and outline the options best suited to its circumstances.
- Speak with our initial advisers
Contact our team via phone or online chat. If we can help, we will arrange a free consultation with one of our consultants to discuss your situation in more depth. - Initial assessment
During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or what alternative options are available. - Formally engage with Wilson Field
After your consultation, if there is an appropriate route forward, we will issue the relevant documentation for you to formally engage us.
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