A3 Premises for Sale

Get Debt Advice to avoid Insolvency

If you’re A3 premises, restaurant, pub or bar business fails and the business has mounting debts, you could end up confronting the prospect of company and personal insolvency. If you find yourself in such a situation, you need to be fully aware of the options available to you and your business. This guide from Money Advice Direct will help restaurant owners should insolvency rear its ugly head.

The leisure debt help team at Money Advice Direct is happy to recommend Gilmarc Associates for all your A3 Premises requirements a firm with over 10 years experience in the sale of leasehold interests of leisure premises all over the UK; be it restaurant, bar, nightclub or any other leisure use Gilmarc Associates will speak in total confidence with you and give you an immediate clear indication as to the price your premises would be able to achieve on the open market.

Debt Help Options for A3 Premises facing Insolvency

It doesn’t matter how low your takings have got to or how bad your accounts may look as there is a premium value on lots of other factors including:-

• Location
• Term of lease remaining
• Review patterns
• Licensing
• Fixtures & Fittings
• Demise
• Accommodation

A sale of the leasehold interest of your A3 premises could be an answer to relieve all of your financial concerns related to the business and maybe even give you a small amount to give you a fresh start for a new business.

The method of treating insolvency will dependant on which status restaurant owners have chosen trade under such as:-

• Sole Trader - Being a sole trader is the simplest way to run a business. However, you are personally liable for any debts that the business runs up, which make this a risky option for businesses that need a lot of investment.
• Partnership - In a partnership, two or more people share the risks, costs and responsibilities of being in business. Each partner is self-employed and takes a share of the profits. Usually, each partner shares in the decision-making and is personally responsible for any debts that the business runs up.
• Limited Legal Partnership - The difference to normal partnership is that liability is limited to the amount of money the partners have invested in the business and to any personal guarantees they have given to raise finance. This means that members have some protection if the business runs into trouble.
• Limited Company - Limited companies exist in their own right. This means the company's finances are separate from the personal finances of its owners. Shareholders may be individuals or other companies. They are not responsible for the company's debts unless they have given guarantees (of a bank loan, for example). However, they may lose the money they have invested in the company if it fails.

Closing an A3 Premises Establishment due to debt

Closing a restaurant, bar, pub or any A3 Premises enterprise due to non payment of debts is not easy and should not be taken lightly. Careful consideration should be given to personal objectives, business objectives and the financial position of the individual and the foreseeable future of any existing business. For more information on receiving debt help through an IVA please call:-

In order to make contact with a Gilmarc Associates representative please call them on 08451 305655 and mention that you have made contact after visiting Money Advice Direct website in order to ensure that extra bit of care and sensitivity.

Restaurants

While many restaurant owners choose limited company status that will offer them less financial liability by establishing a separate legal entity, sole traders and partners are personally liable for their business debts. It is a well known fact that 10% of new restaurants fail or close down during their first year of trading and face insolvency.

Bars and Pubs

Bars and Pubs represent one the most volatile industry sectors. The Market is well known for the ease of setting up and by frequent closures and changes of ownership.

The bar sector and leisure sector is divided into the following segments:-

• Hotel bars
• Upmarket, Chef/patron restaurant / Bars
• Bar Food Restaurants
• Independent high street bars
• Branded chain bars

The lines distinguishing the above market segments are becoming increasingly blurred: for example bars that sell quality food, hotel bars, pubs that are more like bars and “free house” bars.

Hotels traditionally regarded their bars as loss leaders, a necessary service but not an area where they expected to earn any money. However a trend within the past decade seen hotel owners have some very successful bars.

The constant integration and amalgamation of the bar sector has led to rise in insolvencies, bankruptcies and company liquidations within the bar sector.

Closing down a bar

When you close your bar business, you will need to inform various people and organisations of your decision, and tell them the timescales involved. Depending on the size and nature of the bar business, and your status - e.g. sole trader, limited company, partnership - this could involve quite a lot of planning and organisation.

Closing a bar business can be particularly stressful if there is more than one owner or investor involved.

Closing a nightclub

If your nightclub or club fails and the business has mounting debts, you could end up confronting the prospect of company and personal insolvency.

Most club and nightclub owners choose limited company status because being a LTD offers financial liability by establishing a separate legal entity. Others choose to be sole traders and partners; under this method the owners are personally liable for their business debts.

It is a well known fact that 10% of new clubs fail or close down during their first year of trading and face insolvency. The method of treating insolvency will dependant on which status restaurant owners have chosen trade under such limited company (LTD), Partnership or Sole Trader.

The most common insolvency procedure for limited companies is a “CVL – Liquidation”. This is often referred to as “phoenix”. Liquidation allows a companies unsecured debts to be written off and means as a director you can start again.

Closing a pub

When you open a new pub you need to make a decision about its legal status and carefully consider some of the issues involved. This section of the Buy Pubs website looks at the main alternatives, including sole trader, partnership or limited company and their impact should the business close down or face insolvency.

Most pub owners have worked their way up from being a barperson to running their own pub. This is the most effective career structure and should mean the manager will have experience and have had the chance to develop strong business and management skills.

Dealing with the Alcohol License

A3 premises often have a license allowing them to sell alcoholic beverages on site. This license is in the name of one or more names individuals and gives the club the right to serve alcohol up to certain times. This license needs to be protected.

This is done by making an application to the magistrates court for a protection or order, which is temporary permission to sell alcoholic drinks pending full transfer of the license. A protection order lasts for a maximum of two periods or transfer sessions of approximately three months

Please note that an application for a transfer order would usually be a trigger for visits by a fire officer and an environmental health officer. These officers have the right to demand work to be carried out to bring the club up to an acceptable standard. Any decision to continue trading should take into account this potential capital expenditure, which could involve significant sums.

Case study of Restaurant Business Failure

Tony Caroni came to the UK from Italy in 1994; he worked as a Head Chef for a well known London restaurant for 10 years and always dreamed of opening his own restaurant. In 2004, the opportunity came when he and his brothers opened up a fine dining Italian restaurant in Middlesex.

To get funding and finance to pay for the catering equipment that Tony and his brothers were made to sign personal guarantees to cover the risk posed by the finance companies.  They formed a limited company and began trading. Unfortunately, the restaurant was forced to close down after 18 months due the freeholder of the property redeveloping the land. 

Tony Caroni had to initially arrange for the company to be liquidated by opting for a “Creditors Voluntary Liquidation (CVL)”. A CVL is the most common form of liquidation in use in England and Wales and brings to an end the operation of the company. It is used for those companies which are simply no longer viable, which have run out of cash and cannot pay their liabilities on time.

The company’s assets were not valuable enough to pay off the debt owed by the finance companies and so they turned to Tony himself to recover the outstanding debts of £35,000, who were threatening personal bankruptcy.

Tony took advice from Money Advice Direct on his personal debts and opted to take out an IVA – Individual Voluntary Arrangement, which is an alternative to bankruptcy.

Closing a restaurant, bar, pub or any A3 business due to non payment of debts is not easy and should not be taken lightly. Careful consideration should be given to personal objectives, business objectives and the financial position of the individual and the foreseeable future of any existing business.

For more information on receiving debt help through an IVA please call:-

Money Advice Direct

Address:
Money Advice Direct, National Administration Centre, 788-790 Finchley Road, London, NW11 7TJ

Contact By:
Freephone: 0800 074 6918
Fax: 0845 612 2627
Website www.insolvencyhelpline.co.uk
Email: info@insolvencyhelpline.co.uk

Areas Served:
The service is available in England, Scotland. Ireland and Wales

In order to make contact with a Gilmarc Associates representative please call them on 08451 305655 and mention that you have made contact after visiting Money Advice Direct website in order to ensure that extra bit of care and sensitivity.

Morris G Greenberg
Gilmarc Associates
Suite 129, 77 Beak Street
Soho, London W1F 9DB
Tel: 08451 305 655
Fax: 08451 305 654

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