The COVID-19 pandemic has taken a significant toll on the pub industry, with various restrictions, curfews, and closures leading to severe financial hardships for pub and hospitality businesses.
Despite the successful rollout of the vaccine in the UK, the effects of the pandemic have been too devastating for some pubs to overcome. If your pub is facing liquidation, it’s important to know what steps to take and where to seek reliable assistance and guidance.
Expert Liquidation Guidance for Pub Owners
If you believe your pub needs to go into liquidation, seeking professional advice is imperative. Understanding your obligations to creditors under the UK’s stringent insolvency laws is crucial to avoid legal consequences.
Turn to InsolvencySupport.co.uk for reliable guidance on the process of Creditors’ Voluntary Liquidation. Our team of experts has extensive experience in guiding directors through the insolvent liquidation process.
We will assess your options and ensure you take the appropriate action to avoid any adverse consequences. It’s important to act swiftly as a delay could result in a creditor-led liquidation, which could lead to investigations by the Official Receiver.
The Definition of Creditors’ Voluntary Liquidation for Pub Businesses
Creditors’ Voluntary Liquidation, or CVL, is a formal procedure designed for limited companies that are struggling financially and cannot recover. The process leads to the permanent shutdown of the business and is managed by a licensed insolvency practitioner (IP) who serves as the liquidator.
The liquidator is responsible for selling the company’s assets to benefit its creditors and ultimately removing the company’s name from the Companies House register. The liquidator also conducts an investigation into the reasons for the company’s failure and examines if the directors acted inappropriately prior to insolvency.
Top Issues to Consider if Your Pub Requires Liquidation
Company liquidation is a complicated procedure and under specific conditions, directors can become responsible for the company’s debts. Neglecting to safeguard creditors from further financial harm when the business becomes insolvent, such as a pub, can result in accusations of improper behaviour.
Personal guarantees are another area of concern for company directors. If you have given a personal guarantee for the company’s borrowing in the past, your lender will activate the guarantee if the company is unable to pay the debt. The lender has the authority to chase you personally for the remaining debt, which puts your home and other personal assets at risk.
Benefits of Voluntary Liquidation for Pub Businesses
The Creditors’ Voluntary Liquidation (CVL) process offers several significant benefits if your pub must undergo liquidation. As a director, you will have more control over the process, as you can initiate it at your discretion and select the liquidator.
If no other alternatives are available and the business cannot be sold, opting for CVL instead of waiting for a creditor to initiate the liquidation process can help you fulfil your legal duties and prevent allegations of wrongful trading.
Additionally, as a director, you may also be eligible for redundancy pay when your pub is liquidated. If you qualify, you could use the payout to fund the CVL or to fulfil your personal guarantee on a business loan.
Director Redundancy Pay in Pub Businesses
To be eligible for director redundancy, you must have been employed at your pub under a contract of employment for a minimum of two years. If you have also worked at least 16 hours per week in a hands-on role, you may qualify for a claim.
With the average director redundancy claim currently standing at £9,000, it’s worth exploring your eligibility. We can determine if you meet the requirements, offer more information, and assist you with making a claim.
What to Do When Your Pub Must Undergo Liquidation?
If you think your pub business needs to be liquidated, the first step is to seek professional advice. This will give you the opportunity to learn about any potential rescue options, such as alternate funding or official rescue procedures.
For eligible businesses, these options may include restructuring the company’s debts through a Company Voluntary Arrangement (CVA) or entering into company administration. The HMRC also operates a Time to Pay scheme for viable businesses with tax arrears.
The partner-led team at InsolvencySupport.co.uk is available to help you handle this difficult situation and ensure that your pub business is wound down in an orderly manner, if necessary. Contact us today for a free, same-day consultation at one of our offices located throughout the UK.