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Administrative Restoration

But is there a way that they can come back?  And why would a director want to resurrect a closed company anyway?

Administrative restoration is the official term for bringing a dissolved company back into existence and we’ll explain further how they can be returned to life and why directors might want to do this.


Why you should pay to liquidate your company


One reason why a dissolved company could be restored is if the directors believe it may have a profitable future trading again. Maybe the market conditions have changed or they are in a better position to make a success of the venture now than they were previously. 
The only limit to restoring a business in this way is it cannot have been dissolved for more than six years. 

The six year time limit also applies when directors look to restore a business in order to release and realise an asset. 
If a business is struck off or dissolved while still holding assets then they could become the property of the crown after a certain amount of time has elapsed. Also, they could be classed as ownerless or “bona vacantia”. 
In either scenario, if this is why a company is being restored then Companies House could temporarily place the business back on the register in order to facilitate the asset transfer or sale. 

Unlike the administrative restoration time limit of six years, there is no such restriction when it comes to pursuing claims against a dissolved business. The company might have to be restored in order for an injury or other legal claim to be lodged against it and subsequently defended.

The final reason to restore a struck off company is to rectify mistakes made during the initial process. 
A company can only be struck off if it has no debts or arrears.  
Under the imminent Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill - HMRC and the Insolvency Service will be granted retrospective investigation powers against directors. 
This will allow them to look at the circumstances and actions of directors of dissolved companies and if any errors were made, such as striking off a business with an outstanding bounce back loan or VAT arrears for example, they could be followed with sanctions. 
These would not only be fines or a disqualification period which could stretch to 15 years but under the new laws, directors could be made personally liable to repay company incurred debts.


Businesses that have been struck off by Companies House for failure to submit annual accounts or confirmation statements can also be reinstated but like all administrative restorations, they have to meet a certain criteria such as trading when they were struck off and that Companies House enforced the decision, not the directors.

If they do then they can apply to Companies House and complete an administrative restoration form.

If the business was not forcibly removed or doesn’t meet the criteria then they can seek company restoration by a court restoration order instead. 

Once the application is filed and if all the essential forms such as business accounts and financial statements are up to date then the procedure will usually be completed in about four months. 

Chris Horner, insolvency director with BusinessRescueExpert.co.uk said: “Restoring a company just to liquidate it might sound like a hassle but it could be the best thing a director could do to protect themselves if they have any concerns. 

“The new legislation is almost exclusively aimed at directors who have tried to avoid repaying bounce back loans and other debts through dissolving their businesses. 

“But directors who inadvertently struck off their company while it still had debts could very well get caught up in the same sweep.

“Directors who liquidate their companies voluntarily through a creditors voluntary liquidation (CVL) or other process don’t have anything to worry about - HMRC and the Insolvency Service are not targeting them. 

“To avoid any doubt and worry, it would make sense for a director to restore their company, liquidate it and then continue with their career after all the loose ends have finally been tied up.

“They would then avoid disqualification and being made liable for a compensation order up to the value of the company debts plus fines and costs on top.” 


Liquidation brings many benefits to a business owner or director. 

As well as having more say in the process of appointing a liquidator, they can also legally close down even if they owe bounce back loans or other debts.

It brings finality to the situation through a definitive ending allowing the owners or directors to move onto their next venture without any more stress. 

If a business has been dissolved improperly or if it had debts when it was struck off then this is a loose end that could become a bigger problem - especially if the Insolvency Service takes an interest in the business and how it was being run before closure. 

Getting advice from an insolvency professional is always a good idea if you’re thinking about closing a business but if you need to consider an administrative restoration then it’s essential. 

We offer a free initial consultation for any business owner or director to discuss the issues facing their company and together we can work out an efficient and effective solution which can usually be begun to be implemented almost immediately. 

The sooner you get in touch, the sooner we can help.

 

The report found that although essential, the government’s overall response to the pandemic had exposed the taxpayer to significant financial risk for the foreseeable future and that while departments faced difficulties in responding quickly to the pandemic, these risks did not always achieve good value for money. 

The committee singled out the bounce back loan scheme as one of the programmes with a high level of risk reporting an estimated £26 billion of credit and fraud losses uncovered so far. 

Dame Meg Hillier MP, Chair of the Committee, said: “With eye-watering sums of money spent on Covid-19 measures so far the government needs to be clear, now, how this will be managed going forward, and over what period. 

“The ongoing risk to the taxpayer will run for 20 years on things like recovery loans, let alone the other new risks that departments across government must quickly learn to manage.

“If coronavirus is with us for a long time, the financial hangover could leave future generations with a big headache.”

Among the main conclusions and recommendations in the report are:

The report also highlighted the work of the National Audit Office’s (NAO) Covid-19 cost tracker which tracked expenditure and costs across the whole of government and pulled them together in one place. 

The NAO are working on a follow-up to their October 2020 report specifically into the bounce back loan scheme.

It is scheduled to be published in the winter of 2021 and will update their findings on the overall amount of bounce back loan arrears that have been repaid to date and how much remains outstanding. 

We’ve been reporting on bounce back loan arrears and repayment scenarios since April including regional and industry differences so know that whatever number they come up with, it’s going to be big and focus will then shift from data collation to debt recovery.


Businesses with bounce back loan arrears are being stopped from closing down


HMRC and the Insolvency Service are going to be very busy for the rest of 2021. 

They are already using their existing powers to close down businesses and sole traders who falsely obtained bounce back loans and are turning their attention to companies who took them out legitimately but have built up arrears. 

A recent FOI inquiry from BusinessRescueExpert.co.uk revealed that they are being helped by the Department of Business, Energy and Industrial Strategy (BEIS) who are objecting to companies with bounce back loans from being struck off the Companies House register. 

And the final piece of the enforcement jigsaw is still to come with the introduction of The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill which is proceeding through parliament at the moment and expected to become law before the end of the year. 

Amongst the new powers it will grant The Insolvency Service retrospective powers to investigate the directors of companies that have been struck off to examine the circumstances of the dissolution.  

Because the powers are retrospective, they can go back two or three years after the fact and are not limited to bounce back loans but other debts too. 

Any director targeted under the new law could reasonably expect sanctions including fines, disqualification of up to 15 years and potentially being made personally liable for repaying any illegally obtained debts and costs incurred. 

With the remaining government support measures being withdrawn at the end of September and creditors actions such as statutory demands and winding up petitions being allowed to be issued once again, businesses with outstanding bounce back loans and other debts including VAT arrears or unpaid rent or business rates will be understandably worried. 

Instead of wondering when and where the first creditors’ blow will land, directors and business owners can use this time to draw up their own counter strategies starting with some professional insolvency advice

During a free initial consultation, we will better understand the situation facing a business and give our honest appraisal of the options available, depending on what they would like to do. 

Some businesses might want or be able to restructure their debts and eventually trade their way back to profitability with creditors help and forbearance through a company voluntary arrangement (CVA)

An alternative option might be a company voluntary liquidation (CVL)  if there is no realistic path to recovery.  

This will allow the orderly closure of a business even if it has bounce back loan debt and other outstanding arrears that it can’t reasonably clear. 

There are choices and chances that can be taken - but only if the directors or business owners act in time to access them and work with us to act on them. 

pizza


 
Social distancing rules will still apply and it will be limited to table service only but for businesses with no outdoor space or that have been relying on delivery orders alone, it’s set to be a red letter day for a lot of the hospitality industry.
 
Hotels, hostels and B&Bs are also able to open to the public rather than offering self-contained accommodation. 
 
The lifting of restrictions means that a maximum of six people from two households can meet in a group indoors with further restrictions set to be lifted in June. 
 
Kate Nicholls, chief executive of UKHospitality, said: “There is a huge sense of relief within the sector, in particular for the six in 10 venues that weren’t able to reopen due to a lack of outdoor space.
 
“However, with significant restrictions still in place, this is a psychological opening rather than an economic one, with the profitability of the sector still a huge issue.
 
“Hospitality, as it emerges from restrictions, is still in a fragile state and continued government support will be critical to ensuring the sector is rejuvenated and plays a full role in the wider economic recovery.”
 


A Business Viability Review is a far better option than a guess


 
While a number of takeaways, be they fish and chip shops, kebab and pizza makers or make the best jerk chicken outside of the USA and the caribbean, have been operating during lockdown, many haven’t been able to reopen. 
 
Some takeaways have been able to provide a click and collect, drive through or delivery services and won’t see a big change next week as they will be able to continue offering these. 
 
Food providers with an indoor dining facility will be able to reopen this for the first time in months but will have to follow some careful steps to make sure they remain safe and Covid-compliant when they do. 
 
Others might be reopening for the first time since the year of lockdowns began in March 2020, so will have a lot more to do and think about. 
 
Including whether it’s worth reopening at all. 
 


 
Doing the reopening shuffle
 
A brief itinerary for reopening a takeaway or restaurant will look something like this:-
 

 
None of this takes into the financial position of the business itself and how this has been impacted in the previous 12 months.
 
If the restaurant has been able to offer a take away or home delivery service then it will have been able to bring some money into the business as well as possibly taking advantage of government backed support measures such as the bounce back loan scheme or the coronavirus job retention scheme or furlough. 
 
For those that weren’t then things could be a lot more serious and bleaker. 
 
Debts will have continued to accrue, bills would have been paid all the while there’s no income arriving to offset it. Even if they accessed support measures, bounce back loan repayments are beginning to come due unless these have been deferred by six months.
 
The unfortunate but inevitable truth might be that some takeaways just can’t afford to reopen and instead should look at closing their business down properly so they can begin again.
 
This also applies to shawarmis, pizzerias and chippy’s that might still be trading but realistically have no way of clearing their debt and at best are just keeping their heads above water. 
 
Some might just need some breathing space to work out if the business could be viable again and produce a plan to achieve this
 
For others it would involve liquidation but depending on individual circumstances this could be easier, quicker and cheaper than they thought.
 
Before any decision is made the best thing to do is to get in touch with us. 
 
We offer a free, initial consultation where we can get the full breakdown of the circumstances surrounding the business.
 
Then we can tell you what you can do, right now, that will have an immediate impact and what choices can follow from that. 
 
Only then can you look forward to the future with some certainty and be able to plan far ahead of what’s for tea tonight. 

2020 Year of Lockdowns

It’s nearly been 365 days since the UK went into its first national lockdown as it faced its first major public pandemic in over 100 years.

From March 23rd 2020, companies in every sector closed by order and we all had to work, educate and shop from home to contain the spread of Covid-19.

Nothing has really been the same since - especially for businesses.   

We’ve spent the past 12 months helping firms that have fallen into financial difficulties to restructure and pay off their debts under new arrangements or allow them to efficiently close so their owners can move onto new challenges when the lockdown is gradually lifted completely. 

Alongside our business rescue and recovery work, we’ve also spent a year observing, collating and analysing data from various sources to compile a comprehensive and wide-ranging report of what happened to our country and its companies.

The “Year of Lockdowns” story shows what effect restrictions have had on the various industrial sectors, geographic regions and on the individual businesses and employees that make them up.  

This is the story of 2020 - a "Year of Lockdowns”. 


COVID-19 caused more economic damage to the UK than Napoleon, Hitler and The Kaiser 

Napoleon
In an already historic year, we should start with the news about history being made.  

The Office of National Statistics reported that 2020 saw UK official GDP shrink by 9.9% in the previous 12 months - the largest annual fall in over 300 years since the Great Frost of 1709. 

The collapse is even greater than any previously recorded including during the Napoleonic wars; World Wars One and Two; the great depression of the 1920s and the great recession of the late 2000s.  

The economy regained some ground in the second half of the year as some lockdowns were eased and the “Eat Out to Help Out” scheme attracted more people to support their local pubs and restaurants.

Despite these positive factors, the economy was still 6.3% smaller than it was in February, the last full trading month before the first lockdown was implemented. 

This was the biggest fall among all the G7 nations with USA GDP down 3.5%; Germany down 5% and Japan down 5.6% by comparison.


One in three UK workers were furloughed as unemployment rose to a six year high

Furloughed

Since the beginning of the lockdown and the Coronavirus Job Retention Scheme (CJRS) being rolled out, 11.2 million workers have been furloughed in the previous 12 months. 

With 32.6 million people employed in the UK, this means that one in three workers was in receipt of furlough pay at some point in 2020. 

The UK unemployment rate also rose by 1.1% to 5.1% by the end of 2020 with 1,744,000 additional people looking for work. This is the highest recorded level since 2015. 

Chancellor Rishi Sunak extended the furlough scheme until the end of September 2021 in the recent budget with employers expected to contribute 10% of furloughed employees wages from July, rising to 20% for August and September.  

The Office for Budget Responsibility (OBR) estimates that £73.6 billion had already been spent on employment support schemes such as CJRS and others by November 2020 so this will add to this already striking figure. 

While economic and employment activity are expected to rise, greatly, in the next six months as lockdown is gradually lifted, the end of the furlough and other schemes will still create a moment of hazard for businesses and their employees if they can’t find a way to begin to trade profitably by then. 


Construction bore the brunt of insolvencies by industrial sector

Scaffolding

The Insolvency Service reported that since March 2020 there were 8,205 company insolvencies up to and including the end of January 2021. 

Broken down by individual industrial sector they were :

The halting of various building projects, both large and small scale, have badly damaged the construction industry over the previous 12 months. 

This might seem surprising given the historic damage experienced by the hospitality and retail industries but these have been well publicised and several were more visible to the public as an empty shop unit will be more noticeable than an empty building site.

There was also £453.4 million in redundancy pay and other support benefits paid out in 2020 which was the highest amount in ten years and an increase of 31% from 2019.

Another government agency, the Redundancy Payments Service, will make financial payments to employees whose former employers have gone into insolvency and cannot pay any legally due claims. 


Yorkshire and Humber businesses were most likely to become insolvent in 2020

Whitby
With the help of the Office of National Statistics and The Insolvency Service, we looked deeper into the regional insolvency statistics for 2020 and produced a comparative figure - the Corporate Insolvency Ratio - showing the likelihood of insolvency based on the numbers of active businesses in a region/nation and the number of business insolvencies recorded there. 

The table shows the number of businesses registered in each UK nation and English region, the total number of business insolvencies and the Corporate Insolvency Ratio for each.

[ninja_tables id="12447"]

Because of certain statistical caveats, the figures are an approximation based on available data rather than a complete and official record. 

On this matrix, the figures show that a business in the Yorkshire and Humber region of England was statistically most likely to undergo an insolvency event than in any other region (1 in 115) while a company based in Northern Ireland would be least likely (1 in 506). 

Additionally, businesses in the North East, North West and West Midlands of England along with London were at greater risk compared to the national average (1 in 207) while Scotland, Wales and every other English region was less likely than the average. 


Why corporate insolvencies went down in 2020

high street

Given all the news and information we already know about the year of lockdowns, it might be surprising to learn that the total number of corporate insolvencies actually fell in 2020. 

They went down to their lowest recorded levels since 2007. 

So what’s going on? The main reasons can be surmised as follows:-

With the exception of the insolvency moratorium, all of these measures are temporary and will be withdrawn by Autumn this year. 

Ironically, 2021 could have many more corporate insolvencies than 2020 had. 

Chris Horner, Insolvency Director with Business Rescue Expert said: “Ominously, even with restrictions being lifted and economic activity rising, 2021 will be a worse year for insolvencies in several industries than the year of lockdowns was, 

“Government support in the form of backed loans, furloughs and the temporary ban on winding-up petitions and other creditors actions are all expected to end sometime in 2021. 

“Bounce Back Loan repayments and others will begin to come due, businesses will have to decide if they can re employ or redeploy their furloughed workers and creditors that have been under severe financial pressure themselves will finally have the ability to look for repayments that might be critical to their own survival.”


Not on the High Street - Anymore

Topshop

The previous 12 months has seen the demise of some of the most storied companies in Britain. 

Debenhams was formally wound-up in the High Court with BooHoo buying its online brands and trademarks to relaunch as an online-only retailer. 

The Topshop, Topman and Miss Selfridge brands of the Arcadia group were bought by ASOS with BooHoo returning to purchase the remaining Wallis, Burton and Dorothy Perkins brands. 

No physical properties were included in any of the deals. 

BrightHouse, the UK’s largest rent-to-own retailer went into administration in April along with Laura Ashley while fitness retailer DW Sports announced it would not reopen in August. 

Regional UK airline FlyBe went into administration in March where it remains until a buyer is found. With other carriers unable to operate a regular, reliable UK-wide service yet, 2021 is another year that might have historical consequences.

Research from the Local Data Company shows how devastating the year of lockdowns was for the retail industry. 

They estimated that 17,532 chain store outlets located in high streets, retail parks and shopping centres closed last year - an average of 48 per day. This is compared to an overall total of 7,655 openings to replace them, or 21 per day.   

The net loss of nearly 3,500 locations was a third higher than in 2019. 

“The rise of online shopping and home delivery which provided a shot in the arm for the hospitality industry, might be a more mixed blessing for retail” said Chris Horner, Business Rescue Expert’s Insolvency Director. 

“We won’t know for some time how many new habits and shopping methods we adopted in 2020 will stick in 2021 and become permanent or how many will revert to the previous physical model. 

“Some companies might bet big one way or another and hope to reap the benefits of being a successful early mover. Others might hedge their bets and hold back investing, redeployment and retraining which could prove more sensible in the medium and long term but would impact negatively in the immediate future in terms of investment and activity.” 


We still don’t know how 2021 will unfold as many businesses are still unable to open their doors and trade freely and some won’t until we get into the Summer at the earliest. 

For others, even when they do return, they’ll find that customer behaviour, retail trends and other changes will mean that they will have to recalibrate their own offerings if they want to make up lost ground. 

One thing we can guarantee this year, maybe the only thing that can be, is that Business Rescue Expert will continue to be here to help advise and guide any business that is having financial issues or doesn’t know what their next professional step should be. 

We offer free virtual consultations for any company that needs to clarify its position and understand what options are open to it. 

The benefit of acting first is that you usually find you have more choices and strategies available than whoever acts second. 

Get in touch and find out what they are for your business - today.

Budget 2021
For most people, guessing what the Chancellor will announce in his budget and how it will affect them is a diverting parlour game. 
 
Making a couple of pounds here and being offset by losing a couple there is how it usually goes. Online calculators and tools let people try their own hand at opening the red box and making some of the intricate calculations and seeing what the consequences could be. 
 
It can be fun to be a sim Chancellor but if you’re a business owner or director, however, the consequences can be a lot more drastic and expensive in real life. 
 
For instance, one area that will be getting a lot of attention and close scrutiny will be any plans for changes to Capital Gains Tax. 
 
The government already commissioned a report that was published last year recommending a significant increase in rates - doubling them in all circumstances - and also further limiting the scope of Business Asset Disposal Relief (BADR) - the new name for Entrepreneurs Relief. 
 
The report’s tightening recommendations included:-
 

 
If any or all of these recommendations are accepted and become law they’ll have a significant effect on any shareholder hoping to benefit from the Members Voluntary Liquidation (MVL) process
 
Changes could come into force in a little as a month’s time so if you were considering an MVL to take advantage of BADR then there’s really no time to lose. 
 
One thing we need to point out is that the tax point relates to the time you receive a distribution from the MVL, not when the company enters the arrangements. 
 
So if you want to make the biggest tax saving in an MVL then you need to act before it’s too late. 
 
If there are any changes announced in the Budget on Wednesday and you instruct us and provide the necessary required information no later than Friday 12th March 2021 then we guarantee* to facilitate the liquidation within this tax year, allowing any distributions to be made before Monday 5th April 2021 - when any new rules and changes would take effect.
 
Get in touch with us today to talk about an MVL. 
 
We’ll show you how easy it can be to proceed swiftly and take advantage of an important benefit before it’s cut back or removed altogether.  
 
*subject to demand and correct information being supplied in time

DJ


Others will wait until the engine warning light comes on because this is a sure sign that something isn't right. 
 
Others still will be happy to drive along with the engine on fire, black smoke billowing from every hole and window until stopped by the authorities. They’ll throw up their hands and question why they’ve been stopped. If the car’s still going then there’s no problem, is there?
 
Anyone with an interest in the UK’s hospitality industry must feel like they’re in the third scenario right now. Red lights are flashing everywhere and it couldn’t be any more of an emergency than if they were on fire themselves.
 
The latest alarming evidence came with the publication of a new survey from the Night Time Industries Association (NTIA) - the representative body for this section of the hospitality sector. 
 
400 respondents took part and even in this year of shocking news and statistics, the findings are stunning.
 
The stark headline is that three quarters of pubs and clubs operating in tiers 2 and 3 expect to be permanently out of business by Christmas. 
 
75.6% said that without support, they would not be reopening again. 
 
Just under this total said they’d been forced to make staff redundancies this year while nearly two thirds said they’d made over 40% of their workforces redundant already. 
 
Michael Kill, Chief Executive of NTIA, sounds like a man with no more figs to give. 
 
“This announcement by the government has led us to believe that they are intentionally aiming to collapse our sector.
 
“Every town and city across the UK stands to lose valued and much loved venues. This will be another stab in the heart of our town and city centres. 
 
“We stand to lose the cultural institutions and amazing workforce of professionals that the UK are renowned for globally. Our clubs, bars, venues, security, freelancers, staff, managers, DJ’s and many more will lose their livelihoods and continue to suffer financial hardship without government intervention.
 
“I make a direct appeal to the Prime MInister - Mr Johnson, what are you doing to save the lives and livelihoods of the many businesses and workers within the night time economy, businesses that have been closed since March and are continuing to suffer?
 
“They have staff and freelancers that will lose their jobs irrespective of furlough because the businesses won’t survive.
 
“What do you say to that Prime Minister, I hope you’re sleeping well at night because thousands within our sector are struggling to sleep, in fear of their future.”
 
The survey also found that just under three in four respondents were commercial tenants and 77.6% said they were more than two quarters in rent arrears too.
 
The government has been commendably agile in devising and implementing support schemes this year including the Coronavirus Job Retention Scheme (CJRS), Bounce Back Loans (BBL) and several other initiatives such as rent holidays and VAT suspensions.
 
But there hasn’t been and can be no economic “magic bullet” solution that will save every business and every job.
 
The Chancellor himself and others have been unusually forthright about this and recognise the gravity of the situation but it’s still hard not to feel sympathy for everyone in the hospitality sector, not just the night time bars, clubs, pubs and venues, but restaurants, cafes, bistros, micropubs and coffee shops too. 
 
Sympathy won’t pay the bills however and given the forbearance of creditors is not infinite, the window for finding help is perilously close to slamming shut. 
 
Back when there were only four TV channels, the same films would be shown at Christmas every year - the only thing that changed is which of the channels they’d be on. 
 
The one that got most attention is the excellent but definitely unchristmassy “The Great Escape”. 
 
It’s a tremendous misnomer because for a film called and about a large number of prisoners escaping from a POW camp, the actual number who do ultimately get away, three, is incredibly small. Most just don’t make it. 
 
This is the scenario facing the majority of not just night time venues but most of the hospitality sector. That the majority might not make it. 
 
Once this unpalatable but realistic scenario is recognised then the next step is easier - doing something about it. 
 
As well as the various Covid-19 support measures, the government has suspended some insolvency rules and introduced others to make administration not just a viable but an attractive option for many businesses that’s only other path would have been liquidation. 
 
Get in touch with us today and we can let you know what options are available for businesses that are themselves or in a sector that is in trouble. 
 
We can quickly arrange a free virtual consultation where we can better understand the unique challenges you’re facing; what strengths and assets you’ve got to rely on; what the biggest threats are and what you can do to protect, rescue, restructure and relaunch. 
 
We’ve got some tremendous tools to help businesses survive but we can only do so if they let us know they need them. Because despite the odds, for some a great escape can be achieved in the end. 


Hospitality
 
Just when the hospitality sector didn’t think things could get any worse for most of them - it does. 
 
Pubs, cafes and restaurants in tier 3 have to close unless they offer a takeaway or delivery only food service option. 
 
Previously hospitality venues could stay open in tier 3 areas if they also operated as a restaurant but this requirement has been placed upon tier 2 areas. 
 
Even then they are limited to takeaway, delivery or table service only and can only serve alcohol if it accompanies a substantial meal. 
 
All hotels and accommodation destinations in tier 3 have to close regardless of any food offerings. 
 
UKHospitality said this is the biggest threat facing the industry and its revenues. They said: “This is effectively a lockdown for businesses in tier 3 and further purgatory for those facing even tighter restrictions in tier 2. At best it’s a restrictive straitjacket and at worst a lockdown in all but name.”
 
Approximately 98% of their members will be in tiers 2 and 3.
 
“Rather than saving Christmas, these damaging measures will ruin it for hospitality businesses and their customers.”
 
Sacha Lord, Night Time economy advisor for Greater Manchester said: “I’ve heard reports this morning that 94% of pubs in tier 3 areas will go under by Spring, and while this may seem excessive to some, it is no exaggeration.
 
“These places are the lifeblood of communities...to kill these vital social spaces with these hardening measures will be a devastating blow to the very fabric of British culture.
 
“It’s clear that the ever increasing debt from rents, rates and bills will be too much for the majority, especially the independent operators which cannot lean on parent companies. 
 
“Operators across the UK have spent several millions on making their venues covid-secure, following the government’s own guidelines, and these new regulations are a knife to the heart of the sector.” 
 
Tourism and Indoor Entertainment
 
Indoor play centers including soft play and trampoline parks must close in tier 3 areas. As should casinos, bingo halls, bowling alleys, skating rinks, amusement arcades, escape rooms, cinemas, theatres, snooker halls and indoor concert venues.
 
In tier 1 or 2, they can open but must close at 11pm unless a performance starts before 10pm. Public attendance is permitted but limited to either 50% capacity or 1000 people.
 
Retail
 
The good news for retailers is that all stores can reopen across the UK from December 2nd regardless of what tier their local area is in although existing Covid-19 restrictions will apply.
 
Helen Dickinson, Chief Executive of the British Retail Consortium said: “While retailers have stepped up their online delivery over the course of 2020, the bulk of Christmas shopping tends to be done in store. 
 
“The government’s decision to keep all of retail open will help to preserve jobs and the economy and keep Christmas a festive occasion for everyone.”
 
Personal Care
 
Hairdressers and barbers can reopen across the various tiers along with nail salons, spas, tanning salons, tattoo parlours, massage parlours and spas although steam rooms and saunas remain closed.
 
Gyms
 
Outdoor exercise classes can continue but “higher-risk contact activity” shouldn’t take place. Neither should organised indoor sport, physical activity or exercise classes. 
 
The tier system is due to stay in place until Spring 2021 with regular bi-weekly reviews of each area allowing some movement between tiers if possible. 
 
The first one is scheduled for December 16th which would allow some pre-Christmas trading to occur but even this window of opportunity might come too late for some businesses. 
 
While the awaited tiers system might have brought some hope for businesses in some areas, it might have sealed the fates of several more if there is no realistic likelihood that they can reopen and resume a regular service or operations before Christmas or even New Year. 
 
Now would be the perfect time to get in touch with us to arrange a free consultation to discuss what decisions you can take now to help your business make it into 2021. 
 
The sooner you make contact, you’ll find that you’ve got more options and room to move than you might have believed. 
 
The die has been cast until at least midway through December - you can spend this time worrying about the future or taking charge of your future and finding out what you can do, right now, to make it a better one after this Covid Christmas.


You’ll know when the best time to push your two for one special offers are; what drinks go best in happy hour and what combination of flavours work best to complement each other at any given food service. 
 
You’re adept at influencing and positively manipulating your customers wants and needs before they realise they are displaying them so you understand just how important customer behaviour is in influencing and driving their decisions. 
 
Some of the most fascinating and profitable insights can be gained in the space between what customers say they want and what they actually purchase. 
 
Understanding this small but significant space can help us make sense of some seemingly contradictory evidence based on customers' attitudes to the Covid-19 lockdowns currently in place. 
 
Opinion polls found that over 70% of respondents agreed with the latest national lockdown announced by the Prime Minister on Halloween. 
 
What happened next is where the deficit between the opinions and actions meant that restaurant and bar owners who fundamentally understood their customers could take advantage of their desires. 
 
When it was announced that the lockdown was due to be implemented, it gave customers a four-day window to react in advance of the lockdown. As an overwhelming majority favoured the lockdown, you might think that they would take the extra time to prepare for an extended period at home and maybe get some extra supplies and luxuries to pass the time more agreeably. 
 
What actually happened, as any good pub philosopher would have told you, was that hundreds of thousands of people went out to enjoy themselves. 
 
OpenTable, the site that tracks online restaurant reservations, reported that bookings rose by 11% the day after the announcement compared to the previous year and on the day before the lockdown was imposed, they rose by 70% annually. 
 
Data for foot traffic at retail parks showed that they also spiked in the three days before the lockdown - being greater than their 2019 levels for the first time since the Covid-19 safety measures were introduced in March. 
 
Another piece of the puzzle landed last week following the news that a largely successful Covid-19 vaccine had been developed - online searches for holidays in 2021 leapt by 48%.
 
At first glance it appears counterintuitive. People are in favour of lockdowns and tighter restrictions yet in case after case, it appears that actions speak louder than words. 
 
35 million people took advantage of the “Eat Out to Help Out” scheme in August even though Coronavirus infections remained stable.  Once the scheme ended, restaurant custom plummeted. When restaurants were told that they would be closing, they were packed in the three days leading up to the final bell.  
 
Similarly, NHS Track and Tracers are reporting increased difficulties in reaching potentially infected individuals by mobile. 
 
One explanation is the increasing reluctance to answer calls from unknown numbers but equally the suspicion remains that there could be financial repercussions from being ordered to self isolate so it would be beneficial to practice feigned ignorance to avoid it.  
 
Weighing the evidence then, what is the most likely result for hospitality businesses when they are finally allowed to reopen, for argument's sake, without restriction on December 2nd? 
 
Full houses as families and individuals take the chance to enjoy a meal and drink out with friends and family they haven’t been able to meet up with in weeks and months. 
 
The cloud on the horizon is that all expert analysis, evidence and experience points to the immediate return of the tiered local system of restrictions being resurrected and ominously, according to the Bank of England, staying in place until at least the end of Q1 2021 - that’s March. 
 
This is when the extended Coronavirus Jobs Retention Scheme (CJRS) furlough is due to expire although some expert predict that this would invite a similar surge in cases so the only adequate response would be more lockdowns - either locally or nationally - in the New Year. 
 
The answer lies in finding the sweet spot between the competing demands of public health, normal economic activity and individual freedom. There is some recognition of this among policy makers as the second lockdown period is already shorter and less restrictive than the first as they recognised that despite what people were telling opinion polls, more would be willing to break rules to socialise and shop.
 
If you’re relatively successful at reading and understanding customer behaviour in your restaurant, cafe or bar then you could try to apply the same judgement criteria to what the official response will be. 
 
Weighing up the competing motivating factors - will the lockdown be in place for Christmas?  Will they waive the rules for a week but look to impose a stronger, longer lockdown afterwards to make up for it?  Will more people welcome stronger restrictions in the traditionally darker and quieter months of January and February? When will the first virus trials and inoculation programs be likely to be implemented? Will this affect your customer base? - it might if it’s disproportionately made up of senior customers. 
 
Everybody has opinions about how to best combat and beat the virus but if you run a hospitality business then it might be viable for you to apply your innate knowledge of what people eat, drink and do rather than what they say they do to build a reopening plan based on this evidence. 
 
Combined with your existing customer data, you can produce a draft roadmap that could help you with your stock, supply and staffing requirements in advance of the busiest season of the year. 
 
You’ll have to make contingencies and be agile - what services could you offer under various types of local lockdown for example - but there’s no reason you can’t start laying the foundations of your winter recovery right now. 
 
Another easy step you could take would be to get in touch with us to arrange your free initial consultation. 
 
Like you, we don’t have a crystal ball, but we do understand our industry and we know how creditors, HMRC and other businesses dealing with administration and insolvency think and act. 
 
You can use what’s left of the enforced downtime to shore up your company’s financial defences so that if there’s another unexpected and unwanted closure, you’ll be in better shape to see it through.

lockdown
But in a sign of how desperate the feeling in the sector is, 61 chief executive’s have written an open letter to the government demanding that the current lockdown in England is not extended beyond its current date of December 2nd. 

The signatories including the bosses of Marks and Spencer, Dixons Carphone and JD Sports say that November and December make up 20% of annual retails sales and any extension could result in “hundreds of thousands of job losses across the sector”.

As well as more clarity around the plans for December reopening, they are urging for Sunday trading hours to be extended in the run-up to Christmas to help make up for lost sales and increased demand from frustrated customers.

Helen Dickson, chief executive of the British Retail Consortium, said: “To avoid local communities being hit hard by large scale shop closures and job losses, the chancellor must address three issues - rents, rates and reopening.

“The government should extend the rent moratorium, giving essential breathing space to allow negotiations between retailers and landlords to continue. 

“It must ensure retailers do not face an £8 billion rates bill in 2021 and it must ensure shops can reopen from the start of December as the all-important Christmas shopping period gets into full swing.”

The letter reads in full:-

Sir, With less than two weeks to go until the chancellor’s spending review, it is vital that retailers get the clarity they need over the future. Christmas is fast-approaching and half of retail has been forced to shut – depriving these stores of around £2bn per week in sales.

November and December account for over a fifth of all retail sales and if all shops are not allowed to reopen by the start of December, many stores may never reopen putting hundreds of thousands of retail jobs at risk. A continued period of retail closure will see more shuttered high streets and many more job losses at the heart of the festive season.

Government reports have noted that the closure of shops would have a minimal impact on the transmission of Covid. Retailers have invested hundreds of millions in making their stores Covid-secure, keeping both customers and staff safe.

Yet retail stands on the brink and decisive government action is needed to save it. Retailers of all shapes and sizes must be allowed to reopen by the start of December. Without this, there will be little festive cheer left on our high streets. 

Even with the added protection of safety in numbers, it’s still unusual for so many high-level executives to put their heads above the parapet and speak out collectively about public policy. 

It also indicates the level of nervousness and worry in the sector that even if the national lockdown is lifted, it could be replaced by local lockdowns that could be just as restrictive to retail, hospitality and other businesses labeled as “non-essential” and subsequent to closure orders.

If you’re worried about the immediate future of your business then one proactive step you can take right now is to get in touch with us. 

We can advise you on what steps you can take to improve your chances of making it into 2021 in good shape and ready to resume profitable trading when everyday life begins to resemble something like normal again.

DJ


Whether it’s a cosy local snug just off a village green or a vibrant chrome and glass city-centre bar with it’s own piano and regular jazz standards being belted out, the pub and bar are often considered the beating heart of British society. 

But for a long time now they have borne the brunt of a range of blows so that for some it’s a surprise that they are still open at all, let alone being able to turn a profit. 

They’ve seen rises in VAT and business rates (even temporarily offset they will still have to be repaid at some point in the future); big increases in property prices which they have to pay rent on - which has also increased.

They have had to dispose of beer stocks which has cost them financially especially as they have to be done correctly and legally. 

The smoking ban caused them to invest more in outside areas even if the demand was minimal and they didn’t really have the footprint to accommodate it and not one but now two recessions which reduce the amount of disposable income customers have to spend on entertainment. 

The latter is a key point as going to the pub is a habit and once broken, it’s hard to get back into the habit of doing things you once did unthinkingly.  Especially if there’s a cheaper alternative. 

Supermarkets have been in competition for pubs for years aiming to undercut them in both price and volume. Whereas the pub has a unique selling point of a communal and convivial atmosphere, a pub under coronavirus restrictions with social distancing and masks is quite a different proposition from a bouncing Saturday night boozer. 

Even if customers have to spend more time at home, they can still enjoy a drink and as supermarkets’ range now expands into drinkers’ trendy favourites such as craft style beers, artisan gins and prosecco, the arguments for going to the pub are fraying. 

Demographic changes are also having an effect. For anybody over the age of 40, we now live in the age of pre-loading. 

This is where young adult drinkers buy their alcohol from supermarkets or off licences and consume it at home before venturing out to their pub or bar of choice.  Because they have already imbibed a larger amount, they will not be spending as much in these places and will be simply topping up their buzz rather than creating it. 

Every good publican is a pragmatist and the situation facing pubs and bars is clear. 

More than 50% of late-night businesses including pubs, bars and nightclubs have seen a 60% drop in revenue since the 10pm national curfew was introduced on 24th September 2020. 

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) said that pubs had seen an immediate impact on trading.

“If the curfew doesn’t work in reducing infections of the virus, it should be reviewed immediately to give pubs a proper chance of recovery. 

“If it doesn’t work and isn’t removed then it will mean that hospitality businesses and pubs are unfairly singled out.”

The Night Time Industries Association (NITA), a pressure and promotion body made up of independent venues and entrepreneurs estimates that 60% of their members have reluctantly started to make staff redundant - before the winter Job Support Scheme is activated. 

NITA Chief Executive Michael Kill is blunt when he estimates that the Winter Economy Plan is not enough to support the sector citing the combined effect of reduced economic support and ongoing restrictions of varying degrees of severity. 

He said: “Our sector must not be under-valued. We need to challenge the government when restrictions result in the systematic closure of an entire Industry. 

“In the coming weeks, without further support, we are facing a catastrophic collapse, which will see thousands of businesses and jobs lost.”

What can be done?

From the days of speakeasies in the prohibition era in the US, to the lost art of the after hours “lock in” in the UK - pubs and bars have always had an entrepreneurial streak.

Savvy landladies and landlords have always been one step ahead when it comes to helping their customers so there are several ways they can use their natural inventiveness and initiative to meet the moment and keep their doors open.

Service - with a social distance

Like restaurants, pubs that serve food can continue with some sensible changes and allowances made. 

As well as adequate socially distanced table spacing for customers, an advance booking system can be brought in so footfall and traffic can be planned and monitored in advance of busy periods. 

Food ordering itself can also be switched to an app with daily menus displayed here or printed on single use paper.   

A lot of pubs are doing away with cutlery and condiments on menus and replacing them with hand sanitizers as well as giving staff PPE and making sure they are washing their hands regularly and making a public show of meeting the requirements to reassure customers.

Indoors Outdoor

The Beer Garden has always been a USP for pubs and now it can be a crucial tool to help them keep their services going. 

It’s easier to keep socially distanced outside and it can also be designated as a performance area so pubs with music, comedy and live quizzes will be able to continue these popular activities as long as they conform to Covid-19 guidelines. 

Karaoke and professional singing in particular will work but with some changes.  Music volume should be turned down and even song choices considered to avoid singalongs which can increase transmission.  It sounds like a small detail but an important one.  

Pints to go

Pubs serving food can not only consider a food takeaway service if it’s already being cooked, but some enterprising establishments are offering a drinks delivery service within a small radius. 

In this instance one staff member drives and the other keeps the drinks stable and takes them to the doorstop but it’s an example of changing staff roles to help keep the business going and keep them employed rather than being furloughed or even made redundant. 

Government support

As well as the various different levels of government support available to all businesses including the newly updated and enhanced Job Support Scheme, there are others that are specifically targeted at pubs and other hospitality businesses.  

They are temporary VAT rate cuts from 20% to 5% for four months until March 31st 2021 as well as VAT payment deferrals and business rates relief for hospitality businesses. This will be welcome news for city centre establishments that’s rateable value will be out of proportion with similar sized businesses in more rural or lower income locations. 

Pubs are classed as hospitality businesses so can also apply for cash grants of between £2,100 and £3,000 per month which can be backdated to August for those businesses that had to close due to local lockdown rules but did not get any previous additional financial support for their loss of trade. 
  
Time please

Even with the most ingenuitive solutions sometimes things just don’t work out. 

The number of pubs in the UK has been gradually decreasing since 2002 and 2020 could see the largest number for years close their shutters for the last time.  

Despite being so much more to so many people, a pub is also a business at the end of the day and as such has some options and solutions available to it as a result. 

They can obtain an insolvency moratorium which is a relatively new legal protection that gives companies up to 20 working days “breathing space” to begin to restructure themselves and keep creditors at bay while they do it. 

This will allow them to consider other measures to secure their business and give it the best chance to recover and relaunch through a CVA or an administration.  

But sometimes even this option is insufficient to rescue a business with too much debt or other liabilities. The pub could even be solvent but the owner might decide that the coronavirus situation gives them the ideal opportunity to move onto other projects. 

Not every business that goes into liquidation is insolvent but there are always options to make sure a business closes properly.

The bell ringing in a pub is always a sad sound because it means the end of your night there but sadly the bell is tolling for many within the industry themselves. 

Even with financial support, until the Covid-19 situation is resolved, the outlook for pubs and bars is going to be cloudy for the foreseeable future and will give owners the time to consider bigger questions about their future ambitions and careers. 

If you’re one of them then we can help you find some focus. 

Get in touch with one of our expert advisors today and we can arrange a free virtual and free initial consultation held whenever you want it.

We can set out a slate of available options once we better understand your situation and whether you’re hoping to give your business a fresh start or are calling time on this particular venture. 

No matter what you decide, we can advise and help you plan the most efficient and stress free way to get there so you can finally enjoy the drink you’ve finally earned.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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