Just as the retail industry was recovering from a COVID-driven recession, another set of circumstances beyond the control of retailers are starting to take their toll.
The cost-of-living crisis combined with high rates of inflation and soaring interest rates are hitting sales, while the cost of goods, energy and staff are all rising, making it difficult for retailers to remain profitable. Throw in the ongoing battle with burdensome business rates and you can see why times are hard for some UK retailers.
If your retail business is struggling, you're not alone. Seeking urgent advice from a licensed insolvency practitioner can help you understand your options and find the best way forward.
Alongside the economic factors we’ve mentioned, the unseasonal weather has been causing serious problems for some retailers. It has caused demand to drop for seasonal goods and left some stores with stock they cannot sell.
To tempt cash-strapped consumers back into their stores, shops have been ramping up their promotion, which is hitting profit margins. Consumers also have less disposable income and are spending less and making more price-conscious decisions.
If your retail business is struggling, taking early professional insolvency advice is crucial. Although liquidation is one potential route, there could be other options. For example, it may be possible to restructure your retail business so you can continue trading without the parts that were making it unprofitable. That can position your streamlined, more agile business to ride out the storm and capitalise on more favourable trading conditions.
If your retail business is no longer financially viable, it’s in everyone’s best interests to close it down. In this case, a Creditors’ Voluntary Liquidation (CVL) is the most appropriate procedure.
You appoint a liquidator to take control of the company and close it down on your behalf. And importantly, by taking control of the situation and acting to minimise the losses of your creditors, you’ll also protect yourself from allegations of wrongful trading.
Having to close your retail business is not the outcome you would have hoped for, but it can help to make the best of a bad situation. By entering into a CVL, staff will be eligible for redundancy pay, and you may also be able to make a claim as a company director.
A Creditors’ Voluntary Liquidation (CVL) is a voluntary procedure, so you can choose when to liquidate the company and who you want to appoint as the liquidator. It's the liquidator’s job to identify the company’s assets and have them professionally valued. They'll then sell the assets at an auction to raise money to repay your creditors.
Once the creditors have been repaid as far as possible, the liquidator will strike the company off the Companies House register and it will cease to exist as a legal entity. Any remaining creditor debts will be written off unless you have signed a personal guarantee.
It's often the case that the liquidator’s fee is paid by the sale of assets. However, if your assets do not cover the fee, you'd ordinarily have to pay this out of your own pocket. That's where company director redundancy pay can help. Director redundancy payments average around £10,000, which will more than cover the liquidator’s fee.
Liquidation is just one potential solution for a struggling retail business. If the underlying business model is still viable despite your current financial position, we can identify the most appropriate rescue or recovery measures.
It might be that we can negotiate with your creditors to put a Company Voluntary Agreement (CVA) in place. That will allow you to continue trading while repaying your debts over time. Alternatively, Company Administration might be a better option, which would enable you to go on trading without the unprofitable parts of your business.
We know this is a worrying time, but your situation will look clearer and more positive with sound professional advice. Get in touch to find out more about liquidation for your retail business or to discuss your rescue options with our team. We offer a free, same-day phone consultation or we can meet you in person at one of our network of offices throughout the UK.
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.
Looking for immediate support?
Complete the below to get in touch