Hospitality business insolvency and rescue

Hospitality businesses, pubs, restaurants, cafes and hotels, operate on thin margins and high fixed costs, which leaves little room when conditions turn. Rent and energy bills are large and largely unavoidable, staff costs have risen, and trade is seasonal and weather-dependent, so a quiet quarter or an energy spike can quickly create arrears, often with VAT and PAYE the first to slip. Many hospitality companies also carry pandemic-era debt, including Bounce Back Loans, on top of normal liabilities. If your hospitality business is struggling, the route depends on whether the underlying site and trade are viable: a CVA can be powerful in hospitality because it can compromise historic debt and, in some cases, onerous leases, while keeping the business trading; administration can protect a viable business or enable a sale; and where a site is no longer viable, an orderly liquidation is the cleaner close. Early advice matters because rent quarter days and energy contracts create hard deadlines.

The cost squeeze

High fixed rent and energy, rising staff costs, and seasonal, weather-dependent trade leave little margin. VAT and PAYE are often the first arrears to appear when takings dip. See VAT arrears and HMRC debt.

Leases and the CVA option

A CVA can be especially useful in hospitality, because it can compromise historic debt while the business keeps trading. Where a site is viable but the company is not, administration may enable a sale.

Common questions

Can a CVA help my restaurant or pub?

Often yes. A CVA can compromise historic debts and let a viable hospitality business keep trading while it repays an affordable amount over time. A practitioner will assess whether the site and trade are viable.

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Hospitality business insolvency and rescue. Hospitality businesses, pubs, restaurants, cafes and hotels, operate on thin margins and high fixed costs, which leaves little room when conditions turn. Rent and energy bills are large and largely unavoidable, staff costs have risen, and trade is seasonal and weather-dependent, so a quiet quarter or an energy spike can quickly create arrears, often with VAT and PAYE the first to slip. Many hospitality companies also carry pandemic-era debt, including Bounce Back Loans, on top of normal liabilities. If your hospitality business is struggling, the route depends on whether the underlying site and trade are viable: a CVA can be powerful in hospitality because it can compromise historic debt and, in some cases, onerous leases, while keeping the business trading; administration can protect a viable business or enable a sale; and where a site is no longer viable, an orderly liquidation is the cleaner close. Early advice matters because rent quarter days and energy contracts create hard deadlines.

Help for a hospitality business in difficulty

Tell us briefly what is happening and we will arrange a free, confidential, no obligation call with a Licensed Insolvency Practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to a Licensed Insolvency Practitioner. This is general information, not regulated advice.