We have seen Covid 19 thrusting uncertainty onto businesses in recent weeks. While this unsettled period is hopefully short-lived, it has made it clear that owners of licensed premises must be aware of and prepared to deal with new and unexpected challenges.
We are sometimes instructed by clients who operate (or who deal with others who operate) businesses which are unfortunately struggling. I have no doubt that the vast majority of businesses will be able to survive and weather the storm caused by the ongoing difficulties. However, it seems inevitable that some unfortunately will not. We look at what happens to a premises licence in the event of the worst case scenario of insolvency. What can you do to protect your premises licence?
Insolvency and premises licences
I unfortunately expect to be advising clients in the coming weeks regarding what will happen to a premises licence where the premises licence holder (be it an individual or a limited company) becomes insolvent.
If a premises licence holder becomes insolvent, the premises licence will lapse. At that point, there is no premises licence and therefore licensable activities will not be authorised at that premises.
In certain circumstances (and within certain time periods), a premises licence can be resurrected by transferring it to another party. This could be another individual or limited company, for example. Such an application can be requested to have immediate effect upon receipt of it by the licencing authority. This means that in some cases, trade can continue seamlessly. If operators and businesses do not put the right steps in place, they may find themselves with unlicensed premises. This leaves them with the more time-consuming and costly task of applying for a new premises licence, on top of dealing with the insolvency.
If your business is in difficulty and/or you are considering any kind of insolvency (liquidation, administration, bankruptcy or even some kind of voluntary arrangement), then you should seek the advice of a specialist insolvency and licensing solicitor before taking any practical steps. Your solicitor will explain your options and work with you to protect your business.
If you are (or if you know) somebody in the above situation, our licensing team will be happy to explain the position to you and explain how best to proceed. Call us on 0800 988 7756 or fill in the enquiry form.