What happened?

The sweeping rules that came into force yesterday and will last for a minimum until December 30th will come as a shock to customers and businesses that were starting to look forward to a brighter Christmas trading period. 
The main rules affecting hospitality and entertainment sectors include:-

  • Cinemas, theatres, bowling alleys and other indoor entertainment venues must close completely
  • Pubs, restaurants and cafes must close except for takeaway options
  • Crowds at live events will be banned
  • Travel outside of or into Tier 3 areas should be avoided
  • Groups of six will only be allowed to meet outdoors only and people from separate households cannot meet indoors
  • Shops, hairdressers and salons are allowed to remain open but all other “non-essential” shops must close

As well as the West End, various local theatres that were preparing for their annual pantomimes will now be closed. 
Many professional sports teams who were looking forward to welcoming some fans in for the busy Christmas period will now be playing to empty stands once again. Even the famously rambunctious PDC World Darts Championships at Alexandra Palace will only have one night of spectators before the players throw in a cavernous empty hall for the duration of the tournament unless restrictions are lifted at the first review date. 

Is Christmas cancelled?

UKHospitality chief executive Kate Nicholls said that the move effectively “cancels Christmas” for their members. 
She said: “Putting hospitality businesses back into lockdown, which is effectively what Tier 3 amounts to, is not going to tackle increasing infection rates. There’s still no hard evidence that hospitality venues are a significant contributor for the spike in infections. Cases were higher at the end of the last lockdown – during which hospitality was shut down – than at the start. 
“The Government is cracking down on hospitality for an increase in the infection rates that occurred during a period when hospitality was forcibly closed. It makes no sense.
“So many pubs, restaurants, bars, cafes and hotels, having invested so much to make their venues safe, are only just clinging on by the skin of their teeth, but will be forced to take another huge hit. 
“The burden of a region being moved into Tier 3 falls almost exclusively on hospitality businesses. It’s an illogical tactic that fails to tackle Covid effectively but does push businesses closer towards failure.”
She was joined by Eddie Curzon from the Confederation of British Industry (CBI) who said: “Retail and hospitality businesses will have been counting on a festive filip to help mitigate months of hardship, and further restrictions now will come as a devastating blow. Thousands of jobs and livelihoods could be at risk.” 
Emma McClarkin, chief executive of The British Beer & Pub Association said: “This could completely destroy many pubs in London, Herts and Essex who have taken bookings for the lead up to Christmas and New Year’s Eve if the tiers don’t change before then.
“In London alone, it will see the final 1,250 pubs who remained open in Tier 2, supporting 8,000 livelihoods close. The survival of the great British pub as we know it hangs in the balance.”
Sadly she might be right. 

Insolvency moratorium might be a saving grace

Since the first lockdowns were rolled out in March, 2020 has been a near-extinction level event for the hospitality and restaurant industry. 
Many profitable going concerns, through no fault of their own, will be forced into insolvency especially if there is no respite this or early next year. 
But this doesn’t have to mean the end for them. 
There is currently a small window of opportunity that pubs, restaurants and cafes could take advantage of to protect their businesses. 
An Insolvency Moratorium allows a company to have an automatic 20 day freeze on all creditor recovery actions which can also be extended for another 20 days or longer if necessary. 

The moratorium stops:-

  • Winding-up petitions and statutory demands
  • The appointment of administrators by creditors
  • Visits from bailiffs or High Court enforcement officers
  • Landlord recovery actions such as forfeiture of leases or commercial rent arrears recovery (CRAR)

The valuable time the Insolvency Moratorium buys allows the business to work with an insolvency professional to work out how they can restructure their company to survive the current storm and reemerge in a stronger form to grow again once vaccines are rolling out and tiers are being lifted. 
Get in touch with us today to see how you and your business can benefit from an insolvency moratorium or other business rescue processes like administration or a CVA.  
Nobody knows how the next few weeks will play out but it’s going to be expensive even for well-financed hospitality businesses. 
Even if you have the resources and the will to navigate these incredible times, there’s help available to make it easier.
Then you can hopefully begin to look forward to a happier New Year.