Despite a slow and steady return to economic stability in the UK, aided by the effective distribution of COVID-19 vaccines, the food industry has faced challenges due to pandemic-related restrictions. Unfortunately, prolonged exposure to unfavourable conditions has caused many take-away restaurants to suffer significant financial losses, leading to the consideration of liquidation as a necessary solution.
However, if you are a take-away restaurant owner facing this situation, it is important to take proactive steps to safeguard your business and assets. Seeking the advice of financial experts and exploring all available options can help you navigate this difficult time and make informed decisions for the future.
Expert Liquidation Strategies for Take-Away Restaurant Owners
Urgent Insolvency Assistance Needed for Failing Businesses. Avoid severe consequences by stopping operations when insolvency is evident and prioritising creditors.
Early Professional Assistance Vital for Identifying Insolvency. Get a clear understanding of your options by seeking advice in the early stages of financial trouble.
Why is Liquidation Threatening Your Take-away Restaurant?
The ongoing coronavirus pandemic has had a significant impact on the business world, with many previously successful companies facing financial difficulties. This is particularly true for customer-facing sectors such as restaurants and take-away establishments.
Due to national and local lockdowns aimed at controlling the spread of the virus, take-away restaurants have struggled to operate effectively, despite having more opportunities to trade than seated establishments. The cost of implementing social distancing measures and ensuring a safe, Covid-secure environment is also high, particularly when revenue is limited.
If your take-away restaurant is facing financial difficulties and needs to liquidate, what should you expect?
Creditors’ Voluntary Liquidation (CVL): A Solution for Struggling Take-away Restaurants
Creditors’ Voluntary Liquidation (CVL) is a formal process that allows company directors to fulfil their legal obligations while also potentially claiming director redundancy pay. CVL involves the orderly closure of the company and protects the interests of creditors by having a licensed insolvency practitioner (IP) oversee the sale of the company’s assets to generate the highest possible return for creditors.
Unfortunately, the remaining debts are usually written off and unsecured creditors, such as suppliers, rarely receive any compensation through the liquidation process. However, CVL does offer some control for directors as they can choose the timing of the liquidation and select their own liquidator.
Additionally, there is the potential for directors to claim redundancy pay, making CVL a viable option for companies facing financial difficulties.
Can Take-away Restaurant Owners Receive Redundancy Pay?
Did you know that company directors, who are under a contract of employment, may be eligible for statutory redundancy pay like their employees? However, there are certain requirements that must be met for a director to make a claim.
Firstly, the company must have been in operation for at least two years. Secondly, the director must have been actively working for the company for a minimum of 16 hours per week in a practical role.
In addition, if the company owes money to the director, such as their initial investment, they may also be eligible to make a claim. If the claim is successful, the director can use the redundancy pay to finance the company’s Creditors’ Voluntary Liquidation (CVL) process.
Why Choose Creditors’ Voluntary Liquidation Over Compulsory Liquidation?
In the UK, the strict insolvency laws require careful consideration of the proper course of action when a business becomes insolvent. If the initiative to protect creditor interests is not taken by the company and instead a creditor initiates liquidation, it could lead to disqualification or personal liability for the company directors.
This is a critical factor to consider if you believe your take-away restaurant needs to go through liquidation. It’s important to keep in mind that liquidation may not be the only solution available.
What are some alternative options that may be available?
Saving Your Take-away Restaurant Business.
In many liquidation cases, HM Revenue and Customs (HMRC) is a major creditor. If you have outstanding tax debts, it is crucial to get in touch with HMRC immediately. They offer a Time to Pay scheme that allows for the payment of arrears in instalments over an extended period of time.
Company Voluntary Arrangement
Company Voluntary Arrangement (CVA) is a formal insolvency process available to financially stable businesses. It involves restructuring the company’s debts and allows for payment of a single, manageable amount towards these debts over a period of 2-5 years.
If you’re considering liquidating your take-away restaurant and would like more information or an assessment of other options, reach out to the team of experts at InsolvencySupport.co.uk. They offer same-day consultations and can inform you if you’re eligible for director redundancy pay.