The pub industry has suffered greatly during Covid-19, with seemingly endless restrictions, curfews, and closures causing devastating financial loss for pubs and hospitality businesses in general.
Although we’re tackling the virus with a successful vaccination programme in the UK, the adverse effects are simply too profound to overcome in many cases. So if your pub needs to go into liquidation, what should you do and where can you go for reliable help and advice?
Obtaining professional advice is crucial if you believe your pub needs to go into liquidation. You need to understand your legal obligations to creditors, and make sure you don’t fall foul of robust insolvency laws in the UK.
UK Liquidators has extensive experience of helping directors to place their company into insolvent liquidation, and will provide the trustworthy guidance you need on Creditors’ Voluntary Liquidation.
We can let you know whether any alternatives to liquidation exist, and make sure you take the right course of action in these dire trading circumstances. It’s also important to understand the implications of not taking action quickly enough – if you’re forced into liquidation by a creditor, you face stringent investigations by the Official Receiver.
Creditors’ Voluntary Liquidation, also known as CVL, is a formal process available for limited companies that are unable to recover their financial footing. It results in permanent closure of the business and is administered by a liquidator, who must be a licensed insolvency practitioner (IP).
The liquidator realises company assets for the benefit of creditors, and ultimately removes the company name from the register at Companies House. Investigations are also conducted into why the company failed, and whether the directors acted wrongly leading up to insolvency.
Company liquidation is a complex process and directors can become liable for business debts under certain circumstances. Failing to protect creditors from further financial loss when the pub business becomes insolvent, for example, can lead to allegations of misconduct.
Another common area of concern for company directors is personal guarantees. If you’ve provided a personal guarantee for company borrowing in the past, your lender will invoke the guarantee if the business cannot pay. They have the right to pursue you personally for the outstanding debt, which introduces a risk to your home and other personal assets.
The Creditors’ Voluntary Liquidation process offers several key advantages if your pub needs to go into liquidation. It provides more control for you as a director - you can decide when to initiate the process, and are also able to choose the liquidator.
If there really are no rescue options available and the business can’t be sold, placing your pub into liquidation rather than waiting for a creditor to wind up the company, helps you fulfil your legal obligations and avoid wrongful trading.
You may also be able to claim redundancy pay as a director when your pub is liquidated. If you’re eligible you could use the payout to fund the CVL, or perhaps fulfil the personal guarantee on a business loan.
You must have worked as an employee of your pub, under a contract of employment, for a minimum of two years to be eligible for director redundancy. If you’ve also worked a minimum of 16 hours per week in a practical role, you may be eligible to claim.
With the average claim for director redundancy currently being £9,000, it’s definitely worthwhile finding out more. We can establish your eligibility, provide further information, and help you make a claim.
Obtaining professional advice is the first step if you believe your pub business needs to be liquidated. You’ll be able to find out if there are any rescue options available, such as alternative funding or formal rescue procedures.
For eligible businesses, these can include officially restructuring the company’s debts within a Company Voluntary Arrangement (CVA), and entering company administration. HMRC also run a Time to Pay scheme for viable businesses with tax arrears.
Our partner-led team at UK Liquidators are here to help you deal with this stressful situation, and ensure that your pub business is wound down in an orderly manner should it need to go into liquidation. Please contact one of the team to arrange a free, same-day consultation – we work from offices around the UK.
If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.
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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.
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