Hotel Closure and Rescue Options

Operating in the hotel industry can be demanding. The seasonal nature of the business, along with increasing operational costs, business rates, and rising staff wages, can present significant challenges to you and your business.

If your hotel company is experiencing financial difficulties, it’s essential to seek insolvency advice promptly to explore your options for closure or recovery.

Common financial challenges for hotels

We can help advise on specific financial issues your hotel, or other accommodation provider may be facing, including but not limited to:

• Property and Lease Management
  Hotels often operate under leases or have significant property-related liabilities. We can offer insights on how you can negotiate with landlords and manage property issues during insolvency proceedings.
• Energy and utility bills
  Given that hotels typically operate round-the-clock and often feature multiple function rooms, their energy usage is notably high due to constant demands for heating, cooling, lighting, and amenities like pools and spas. We can help by negotiating repayment terms or writing off arrears through insolvency procedures.
• Seasonal cash flow problems
  Seasonal cash flow can often leave directors of hotels unsure on their solvent position, which we can help you assess. By acting quickly you avoid the risk of trading whilst insolvent.
• Employee relationship management
  The hotel industry is highly reliant on its staff, and we understand the importance of ensuring that staff understand their redundancy pay entitlements and how a Transfer of Undertakings Protection of Employment rights (TUPE) would work during company restructuring.
• 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 hotel

Below are two formal insolvency procedures, which would allow your hotel 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, which 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 and aiding in negotiations with landlords. It would allow your hotel to continue trading and to retain all your company’s goodwill and reputation with customers, whilst being protected from future creditor legal action. CVAs typically last for up to  five years and once concluded any remaining unsecured debt is written off.
  More on Company Voluntary Arrangements
• 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 hotel company

If your hotel is insolvent and creditor pressure has reached a level which means the business cannot continue to trade, the liquidation of your hotel would draw a line under its operations and write off its unsecured debts.

• Close your hotel down via a Creditors Voluntary Liquidation (CVL)
  A Creditors Voluntary Liquidation (CVL) is a formal insolvency process designed for companies that are insolvent and have unmanageable debt. The process would close your hotel, terminating leases and hire purchase agreements, 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 Creditors Voluntary Liquidation
• Close your hotel down and start again via a Pre-pack Liquidation
  A pre-pack liquidation is an informal term for a type of liquidation where one company pre-purchases the assets of an existing company that is then liquidated. This allows you to close your hotel company while continuing its business under 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 and how it works.
  More on Pre-pack Liquidation

Commercial finance for hotel companies

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 are a range of finance options potentially available that can 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 fits your company.

How to get in touch with us: The next steps

If your hotel is in financial difficulty, it’s important to understand the different closure and recovery options available. Our initial advisors will offer a comprehensive explanation of the different options available to you and our experienced consultants will look at tailoring our processes to your hotel’s circumstances.

Contact our initial advisors, who can advise you on your company’s solvent position and outline the options best suited to its circumstances.

1. 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.
2. Initial assessment
   During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or what alternative options are available.
3. 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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