Lisa HoggView Profile
The number of winding-up petitions taken against restaurants is up 165% in 2020, compared with the same period in 2019, a case study has confirmed.
The figures come as government lockdown measures, enforced to curb the spread of COVID-19, have seen businesses in the hospitality sector forced to close their doors.
National accountancy group UHY Hacker Young has stated* that these figures reflect the struggles that businesses faced before total lockdown was enforced, as a result of reduced business due to early social-distancing measures. The group have warned the business community to expect a surge in such petitions once lockdown rules, and current financial protections, are phased out.
Winding up petitions suspended until 30th June
In order to offer some financial protection to businesses affected by the lockdown, the government announced last month a suspension of winding-up petitions. The move means that businesses facing financial difficulty due to Coronavirus, who may be unable to meet their liabilities, are protected from forced closure by their creditors. This gives companies the time and breathing space to seek aid to improve their situation, without the immediate threat of creditor action.
These measures, however, are due to end on the 30th of June. UHY Hacker Young has highlighted this date as a troubling one, as the end of such restrictions could see a sudden surge in winding-up petitions being taken against vulnerable companies.
Many businesses, including restaurants, have managed to maintain some stability through the aid of government grants, and the Coronavirus Job Retention Scheme. However, it is expected that many of these may struggle to stay in business once the lockdown ends.
“Once lockdown measures are relaxed and the new temporary ban on winding up orders ends, a lot of restaurants will struggle to stay afloat for long.” – Peter Kubic, partner at UHY Hacker Young
When will restaurants reopen?
Some of the Coronavirus lockdown measures were eased last week, as the Prime Minister gave a statement on the 16th May highlighting the possible exit plan. He stated in this address that, though some measures would be lifted, the reopening of bars and restaurants could not be expected until 4th July at the earliest. Though this gave some clarity, it also stirred anxiety for business-owners facing mounting financial pressure.
The message from Westminster, though still uncertain, holds the stark warning that the hospitality sector may be one of the last to resume trading. Though there is light at the end of the tunnel, a return to ‘business as usual’ may still be a long way off.
Help for business owners
If your business is struggling due to the effects of COVID-19, we can help. As a licensed and regulated insolvency practice, Wilson Field has the tools and experience to guide your company towards the best route forward. Be this overseeing a formal arrangement between you and your creditors, or managing the process of company closure, we will take all aspects of your situation into account.
For more information on the services we can offer, visit our Coronavirus help centre, and get in touch today.
*Case study conducted by UHY Hacker Young 2019-2020