Catering Service Company Closure and Rescue Options
Catering service companies face unique challenges. Maintaining payments for the resources and utilities needed to supply clients and keeping up with regulatory and licensing requirements can be costly and unpredictable, all while making sure they offer customers consistent quality at an affordable price to prevent them from changing to a competitor. If your catering company is facing financial challenges, you should seek insolvency advice where you can explore potential options for your company’s recovery or closure.
This guide is designed to help you navigate the complexities of insolvency, offering practical advice tailored to catering service companies. 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 catering services
Speak to us for free, impartial, confidential advice on financial issues that your catering company could experience. These could include, but are not limited to:
- Increasing costs
Buying raw ingredients, pre-packaged food, covering electricity, water and gas costs, paying staff wages, and transportation costs all add up. These costs can fluctuate depending on external economic factors. We can help you plan a way forward if an upsurge in costs is putting a strain on the company and they can’t be passed on to clients. - Seasonal or inconsistent workflow
Unless a catering service company has a consistent contract, the company’s workflow could be inconsistent or centre on events rather than rolling contracts. This can lead to greater pressure on those smaller contracts. We can advise you on the best course of action if losing clients risks your business’ financial viability. - External economic conditions
With costs rising, some catering companies might have to pass these onto their customers. A potential risk of this approach is clients reducing orders or even switching to a cheaper supplier. We can guide you towards a viable and workable solution if your company has seen a drop in orders. - Regulatory and compliance issues
The food and catering industries have strict storage and preparation standards and safety regulations. Licenses may need maintaining for continued operations, and failing to keep up with compliance can lead to heavy fines. Speak to us if a one-off payment, such as a fine or license renewal, has negatively impacted your company’s finances. - Reputational damage
A bad experience or a lapse in quality can lead to current clients switching to a different supplier, while bad word-of-mouth and negative reviews online can turn away potential new clients. If this has caused a drop in takings and you can’t cover your business’ outgoings, speak to us for tailored advice. - 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 catering company
Below are two formal insolvency procedures, which would allow your catering company to continue trading whilst being protected from creditor action:
- Repaying company debts through a Company Voluntary Arrangement (CVA)
A CVA is a formal payment plan between a company and its creditors that enables a company to manage their unsecured debts, by making affordable monthly payments their creditors. The process can last for up to five years and, once concluded, will write off the remaining unsecured debts. By entering into a CVA, your catering company will be protected from creditors in the plan and will allow you to remain in control of the company, continuing to trade and preserving your brand’s reputation.
More on a Company Voluntary Arrangement - Restructuring the 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 catering company
If your catering company is insolvent and creditor pressure has reached a level which means the business cannot continue to trade, the liquidation of your catering company would draw a line under its operations and write off its unsecured debts.
- Closing your catering company down via a Creditors Voluntary Liquidation (CVL)
A CVL is a formal insolvency procedure designed for companies that are insolvent. The process would formally close and liquidate your company, drawing a line under your company’s operations, writing off its unsecured debt and giving you, the director, a chance to move on and start afresh.
More on a Creditors Voluntary Liquidation - Close your catering company down and start again via a pre-pack liquidation
A pre-pack liquidation is a form of CVL, where a new or existing company agrees to pre-purchase the assets of an existing company, which is then formally liquidated. This procedure would enable you to continue trading your business in a new limited company, retaining key assets, keeping your customer base and business relationships without the historical unsecured debts of your previous company.
More on pre-pack liquidation
Commercial finance for catering services
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 catering company 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 company’s 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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