Liquidation advice for pharmacies

How to liquidate your pharmacy

The fact that many UK pharmacies are struggling is nothing new. Pharmacies have been underfunded for many years, pushing many to the brink of closure. In recent years, rising costs have added to the pressure, leaving many pharmacy owners with little choice but to consider their options. 

If your pharmacy is no longer sustainable or has significant debts that you are struggling to repay, please contact our team of Insolvency Practitioners as early as possible. We will assess your pharmacy’s financial position, explain the options available to you and provide professional liquidation advice if closure is in the best interests of you and your creditors. 

Why are pharmacies struggling?  

Pharmacies are a crucial presence on the UK’s high streets, providing not only prescriptions but also medical advice and treatment as the government seeks to reduce the pressure on GPs. However, despite the growing role of pharmacies, funding, or the lack of it, remains a significant challenge. Although a new funding package is now in place, many pharmacies are still struggling to breakeven. 

Pharmacies also face many of the same pressures as other high street businesses, including increases in the National Minimum Wage, rising employers’ National Insurance contributions and persistently high rents and energy costs. The result is that six in 10 pharmacies report being on the brink of closure, with 51% losing money and 45% of pharmacy owners relying on personal savings to get by.  

Liquidation advice for pharmacies

If your pharmacy cannot pay its debts when they are due, or the total value of its liabilities exceeds its assets, it is technically insolvent. As soon as you know or should know that your pharmacy is insolvent, you must contact a licensed Insolvency Practitioner. 

If your pharmacy has significant debt and is no longer financially viable, company liquidation will likely be the only viable option. In that case, we will explain how to begin the liquidation process, advise you on the steps you can take to protect your position and guide you seamlessly through the process. 

Creditors’ Voluntary Liquidation for pharmacies

Creditors’ Voluntary Liquidation (CVL) is a formal procedure you can instigate as a company director. Acting on your behalf, we will take control of your pharmacy, wind down its affairs and sell its assets to repay its debts as far as possible. The company is then dissolved and ceases to exist as a legal entity.

Any remaining unpaid debts are typically written off, allowing you to draw a line under the business and move on. You may also qualify for director’s redundancy pay, which often averages around £10,000. That can provide valuable financial security and reassurance while you plan your next steps.

Rescuing pharmacies in financial distress

Liquidation is not the only option for struggling pharmacies. If your pharmacy has unmanageable debts but a viable business model, there may be ways to save it. Your options can include:

• Informal or formal debt payment plans - If you have debts with suppliers, a landlord or HMRC that you are unable to pay in full, you may be able to negotiate more favourable repayment terms. For example, HMRC Time to Pay Arrangements allow you to spread outstanding tax debts over a typical period of three to 12 months, giving you more time to pay what you owe. 
On the other hand, if you have multiple creditors, a formal instalment plan known as a Company Voluntary Arrangement (CVA) may be a better fit. It protects you from creditor pressure and allows you to repay what you can afford while continuing to trade.
• Selling your pharmacy - Even pharmacies that are struggling can still be attractive to certain buyers. With the help of an Insolvency Practitioner, you can explore the possibility of selling the business as a going concern. That will allow it to continue trading under new ownership and preserve jobs. If that’s not possible, you may be able to sell its underlying assets to a third party.
• Company Administration - If you are facing severe pressure from creditors or they are taking legal action, putting the pharmacy into Administration will provide some respite while an Insolvency Practitioner formulates a plan. They will aim to rescue the company as a going concern, sell it, or if that’s not possible, achieve a better result for the creditors than if it entered immediate liquidation. 

Professional liquidation advice for pharmacies

If you’re worried about the financial health of your pharmacy, our licensed Insolvency Practitioners are here to help. We can assess your position, explain your options and guide you through the most appropriate rescue or closure process. Get in touch for a free, same-day phone consultation or arrange a meeting at one of our 100+ UK offices.