Supermarket Company Closure and Recovery Options
Supermarkets are essential to many, but failing to keep up with customer expectations in a competitive market can lead to financial challenges. A downturn in customers, coupled with increasing inventory prices and other running costs, can put additional strain on your company. Whether you’re looking to rescue or close your supermarket, it’s essential that you understand the insolvency processes available and what they entail.
In this guide, we will help you navigate the complexities of insolvency and offer practical advice tailored to supermarkets. With the right knowledge, you can make informed decisions about the future of your company, whether that involves repaying, restructuring, refinancing, or winding down operations.
Common financial challenges for supermarkets
We can help advise on specific financial issues that a supermarket can face, including but not limited to:
- Inventory and operational costs
Supermarkets require a wide range of products, potentially in large quantities. Acquiring this amount of stock can be costly, especially if prices fluctuate. Additionally, a supermarket must contend with a company’s typical operating costs, paying staff competitive salaries, covering overheads such as utilities and rent on premises and maintaining them to a high standard that retains customers. All these can lead to financial strain. We can assess your situation if costs have increased to the point where your company may not be financially viable. - A fiercely competitive market
The supermarket industry is extremely competitive, with even the ‘Big Four’ having to work to maintain their customers. This is even more prevalent for smaller supermarkets, which may lack the big-name selling power of their peers, and with fewer outlets and limited reach. Competition from discount retailers and online stores can also lead to a drop in customers. If competition has decreased your profit margins, we can assess your options and guide you towards the right solution. - Changing customer habits
With the convenience of online shopping, customers want more unique experiences from the places they do visit, including supermarkets. Innovations such as direct-to-door deliveries and loyalty schemes can add appeal over the competition, and if your supermarket doesn’t offer these services, you could lose out to those that do. We can advise you on the most suitable insolvency procedure to help your company if changing consumer habits have impacted its cash flow. - External issues
Your supermarket’s operations may depend on external resources and third parties, logistics, hardware and software, the price of fuel, import tariffs, and the wholesale cost of purchasing products. Any disruptions to supply chains, technological malfunctions, or increase in costs could negatively affect your supermarket’s financial position and lead to potential insolvency. We can assess your company’s solvent position if it is struggling and advise you on the best way forward. - Bounce Back Loans (BBL)
The government’s Bounce Back Loan initiative was 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 supermarket
Below are two formal insolvency procedures that would allow your supermarket 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 payment plan between a company and its creditors that allows you to repay its unsecured debts in instalments tailored to what the company can afford monthly. The terms of your CVA will be agreed to by your creditors, and when in place, all interest and charges are dropped and creditors in the arrangement cannot take further legal action. The process will allow you to continue trading and retain all your company’s goodwill and reputation with customers. The process lasts for up to five years and on successful completion, any remaining unsecured debt in the arrangement is written off.
More on a Company Voluntary Arrangement - Restructuring your supermarket through administration
Administration is an insolvency procedure for companies that are insolvent. Entering the procedure, your company will be in a temporary state of protection by a moratorium that halts creditor action, including legal proceedings. This enables your company to continue trading with breathing space from creditors, as we act as administrator and try to rescue your company as a going concern, attempting to restructure it into a more profitable organisation. If rescuing the company isn’t a viable option, we will also look at the most appropriate exit strategies from administration, whether that be a potential sale of the business, assets, the whole company, or transitioning to an alternative insolvency procedure.
More on administration
How we can help close and liquidate your supermarket
If your supermarket is insolvent and creditor pressure has reached a level where the business cannot continue to trade, liquidating the company would draw a line under its operations and write off its unsecured debts.
- Close your supermarket 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 supermarket, ceasing its trading operations, realising any assets and removing the threat of creditor legal action. Once competed, your company’s unsecured debts will be written off and the company will be dissolved. 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 supermarket down and start again via a pre-pack liquidation
A pre-pack liquidation is an informal term for a type of liquidation where the sale of your company’s assets is arranged before liquidation. This allows you to close your supermarket while continuing its business under the purchasing company without any unsecured historical liabilities. 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 supermarkets
If the company has an otherwise healthy cash flow, but a large upcoming payment risks its future, 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 fit your company.
More on commercial financeHow to get in touch with us: The next steps
If your supermarket company is facing financial challenges, it’s important to understand the different closure and recovery options available. Our initial advisers will offer a comprehensive explanation of the different options, and our experienced consultants will look at tailoring our processes to your supermarket’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
Make contact with our team, via phone, filling in a form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation. - Initial assessment
During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or whether alternative solutions better suit your company’s problems - Formally engage with Wilson Field
If there is an appropriate insolvency solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us.
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