The business impact of the pandemic has been felt across all sectors, but none more so than hospitality. Unfortunately over the last few months, particularly with the end of the furlough scheme, we have seen a number of operators fall into serious financial difficulty. If you operate licensed premises and are facing insolvency it is important you are aware of the options available to you and the impact these might have on your licence.
There are various corporate restructuring options including Administration, Liquidation and Company Voluntary Arrangements (CVAs). As far as personal insolvency is concerned, options include Sequestration, Individual Voluntary Arrangements (IVAs) and Protected Trust Deeds/Debt Arrangement Scheme. Each of these options has a different purpose, process and effect and is appropriate in different circumstances. If you feel that you may need to consider rescue options it is always a good idea to take advice at as early a stage as possible so as to access any assistance before it is too late. While we at Hill Brown Licensing cannot offer restructuring advice, we work closely with external specialists in this field and can introduce our clients as necessary. Insolvency experts can offer a bespoke service, including early stage review, with a view to providing simple solutions or structuring a package tailored to your particular circumstances.
In exploring your options it is also important to ensure that you consider the interplay with licensing, particularly where there is an intention for the premises to continue trading. A Premises Licence can be a particularly valuable business asset, particularly for premises located in certain areas.
In terms of the Section 34 of Licensing (Scotland) Act 2005, where an individual, company or partnership holding a Premises Licence becomes insolvent, someone other than the licenceholder (in practice this is usually an administrator) has 28 days (although there is currently discretion for Boards to extend this period due to covid) in which to lodge an application to transfer the licence, failing which the licence will cease to exist.
In circumstances where it is foreseeable that the current licenceholder will become insolvent it may be an option to arrange for transfer of the licence before the insolvency event occurs. Section 33 of the Act allows them to transfer the licence to another person, partnership or company and can be lodged at any time.
Where there is a need for a premises to continue to hold licence and it is possible to transfer an existing licence, that is always preferable to making a new application as obtaining a new licence is not always easy, particularly in areas of over-provision, where there is a presumption against the grant of new licences. There are also practicalities to consider – a new licence application can take many months and can be costly.
Contact our Insolvency & Licensing Lawyers, Glasgow
If you are facing insolvency and require advice in connection with your Premises Licence please get in touch with our expert team.
