Bars and Pubs Closure and Rescue Options
Owning and operating a bar or a pub can be more challenging and demanding than you might realise. The industry is susceptible to nationwide economic downturns, rises in running costs, challenges in recruiting and keeping staff, and people going out less to save their disposable income. Such detriments can have a much more damaging impact on independent outlets than chains.
If your bar or pub is in financial distress, with insufficient income to cover its outgoings, you should look for methods to turn the situation around by seeking insolvency advice to explore your business’ potential options for recovery or closure.
Common financial challenges for bars and pubs
We can help advise on financial issues your bar or pub may face. These could include, but are not limited to:
- Unsustainable operational costs
Rent in a popular location, the costs of utilities, supplies of food, drink, cutlery, crockery, glassware, import charges, and paying staff wages, along with keeping up with increases in minimum and living wages, can all put a strain on your pub or bar if your takings aren’t rising in tandem with these expenses. We can advise you on the best route forward if your company’s takings aren’t enough to cover its outgoings. - Changing customer habits
With customers keeping a closer eye on how they spend their disposable income and putting more emphasis on what they spend on essentials, they may cut back on what they spend on eating and drinking out, with some choosing instead to do so at home. If you’ve noticed a drop in customers which has affected your company’s financial standing, contact us. - Pressure to offer something new
As customer habits change, a market has opened for experiences outside those offered by a standard bar or pub. This can put pressure on your establishment to innovate and offer something different from the competition. Depending on your adaptability, this can lead to a profitable niche, but can also lead to losses if an idea doesn’t return the investment. We can advise if a one-off expense has left your company struggling to cover its liabilities. - Adapting to new technology
Pubs and bars are increasingly adopting online reservations, strategic use of social media marketing, and offering their food or drink via online delivery apps. Failing to keep up with the competition on this new technological front can leave your business at a disadvantage. Speak to us if your company cannot afford necessary upgrades, or if the costs of running them has become unsustainable. - 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 your BBL and how it would be treated in various insolvency options.
How we can help rescue your bar or pub
Below are two formal insolvency procedures, which would allow your bar or pub to continue trading whilst being protected from creditor action:
- Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA)
A CVA is a formal repayment plan that allows your company to repay its unsecured debts in instalments tailored to what it can afford monthly. This would include managing property and lease negotiations and aiding in those negotiations with your landlords. It would allow your insolvent bar or pub operating through a limited company to continue trading and to retain all your company’s goodwill and reputation with customers whilst being protected from any creditor legal action. CVAs typically last for up to five years, and once concluded, any remaining unsecured debt is written off.
More on a Company Voluntary Arrangement - Restructure your company through administration
Administration is a temporary state for a company, that halts debt enforcement and creditor action, allowing your company to continue trading. We will act as administrator and try to restructure your company in order to rescue it as a going concern by turning your company into a leaner more profitable operation whilst also making it more appealing to potential buyers.
More on administration
How we can help close and liquidate your bar or pub
If your bar or pub is insolvent and creditor pressure has reached a level which means the business cannot continue to trade, the liquidation of your company would draw a line under its operations and write off its unsecured debts.
- Close your bar or pub down via a Creditors Voluntary Liquidation (CVL)
A CVL is a formal insolvency procedure for companies that are insolvent. By entering into a CVL, your company would cease trading and once closed, would end all of the company’s obligations. The process would see your company’s assets realised, while terminating outgoing payment agreements like loans and leases. Once the procedure is finished, any unpaid unsecured debts will be written off. If eligible, yourself as a director and employees 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 Creditors Voluntary Liquidation - Close your bar or pub down and start again via a Pre-pack Liquidation
A pre-pack liquidation is an informal term for a type of liquidation where a company pre-purchases the assets of an existing company that is then liquidated. If your company enters into a pre-pack liquidation, it would allow you to continue its core business in a new limited company, without any historical unsecured debts associated to the previous company. With minimal disruption to the business’s brand, customer base and operational activity, the new limited company can retain essential assets, and under TUPE regulations, you can also transfer key employees. 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 and how it works.
More on Pre-pack Liquidation
Commercial finance for your bar or pub
If your 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 you cover a one-off expense or a gap in your company’s incoming payments. Speak to us for a more detailed breakdown of which commercial finance options would best fit your company.
More on commercial financeHow to get in touch with us: The next steps
If your bar or pub 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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