The events sector was severely affected by coronavirus from the start of the pandemic, and continues to experience extreme financial distress. The Covid-19 vaccination programme does offer hope that the economy will open up fully very soon, but it may already be too late for events companies that have been unable to operate in any form for more than 12 months.
The ever-changing restrictions on trading – the numbers that can attend events such as weddings, for example – have made it impossible to plan ahead. This has created huge uncertainty and an impossible trading environment for events companies, regardless of size.
The ripple effect is also significant, with individual creative artists and performers, freelance tour managers, actors, and catering staff, as well as the venues themselves, experiencing cancellations and postponements across the board.
It’s crucial to obtain reliable liquidation advice to clarify your options if you’re in the events sector, and to ensure you meet your legal obligations to creditors. Directors of any company in insolvency must prioritise their creditors’ interests, and adhere to the strict rules of insolvency in the UK.
This means ceasing trade immediately they become insolvent. It the falls to licensed insolvency practitioners (IPs) to establish whether business rescue is possible. If not, it’s important to understand what happens next and how liquidation proceeds.
There may be hope for your events company, even in such dire financial straits. Before we look at potential alternatives to liquidation, however, what happens when your events company is liquidated?
Liquidation may be the only option left for your events business, in which case you’ll need to enter Creditors’ Voluntary Liquidation, or CVL. This is a formal process undertaken by licensed insolvency practitioners, and ultimately results in business closure.
By entering into liquidation voluntarily you protect your creditors from further losses, whilst also meeting your statutory obligations as a company director. Liquidation involves selling all business assets for the benefit of creditors, with remaining debts being written off.
It must be noted that, if you’ve provided a personal guarantee for any business borrowing, the loan won’t be written off and you’ll have to repay the lender - if you can’t repay, you may be able to secure redundancy as a director.
If you’ve worked under a contract of employment for at least two years, and receive a regular salary through PAYE, you may be eligible to claim director redundancy and other statutory entitlements.
UK Liquidators can provide further advice on eligibility for director redundancy, and with the current average claim being £9,000, this could provide the means to pay for the CVL process and/or repay a personal guarantee.
Several options may be available that could rescue your company and enable it to trade again when restrictions are lifted. These options might include:
UK Liquidators can provide a professional assessment of your business’ financial situation, and offer clear, reliable events company liquidation advice. Please contact one of our licensed insolvency practitioners to arrange a free, same-day consultation.
If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.
Take our 60 second test and find out
If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.
Complete the below to get in touch