Options for an Insolvent Pub

23 October 2017

Glass in Pub

See below some advice given on our online chat regarding an insolvent pub


I hope I was able to give you some options today.
We discussed the fact that the company has two pubs in [town], one we will call “large pub” the other “small pub”. Both are tenanted pubs with Company 2.


The large pub tenancy ends in May, you need to provide 6 months notice and have yet to do so.
The small pub is reasonably profitable and you wish to retain this if possible. The company is insolvent and has tax liabilities it cannot meet. You are not taking salary and are struggling to survive financially as a result.


We discussed Option A; close the large pub, make employees redundant and hand the keys back to Company 2, this will cause Company 2 to look at the issues and it may decided to end the lease/tenancy of the small pub as a result. Or it may not. This action would straight away cut costs.


Option B is to place the company into creditors voluntary liquidation. This would end both leases/tenancy agreements when the liquidator is appointed by creditors. But it also writes off the debts.


Then you would seek to retain the small pub under a new agreement as a sole trader. Do NOT trade as a partnership in case this fails in future, this could lead to BOTH of you being made bankrupt as partners.
So liquidation would bring all the debts and the business to an end.

The employees would get paid redundancy by the RPO – redundancy payments office which is a government safety net.