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Hospitality

Hospitality Insolvency

If you are under financial pressure we can help. You maybe running a hotel, restaurant, cafe or pub. One key question we will ask you early on is do you want to try and carry on? If the answer is yes we will try and help you do that. If the answer is no then we will help you with a more organised closing down. 

This business sector has had a lot of problems that have all affected profitability.  Some examples of the issue are:

  • This sector works on very tight margins. It only works if you are busy all the time.
  • Rising staff wages due to the increased minimum wage.
  • Workplace pensions costs have gradually moved onto the employer.
  • The increased costs of food and wine imports as the Euro has got stronger.
  • Rising business rates.
  • Increased competition from home food delivery.
  • The virus forcing a closing down.

These issues have affected all hospitality industries.

How to save the business?

  • The government backed furlough scheme can be used in Administrations but not liquidations.
  • A pre-pack Administration or Company Voluntary Arrangement can be used to try and save a business.
  • It helps if you have a supportive longer term thinking landlord.
  • Most suppliers want you to keep going – they do not want to lose a customer.

 

We can help in the following hospitality sectors


Hotels

Customers of hotels forget that 20% of what they are paying goes in VAT to the government.  This coupled with high wage costs and the issues above making running a successful hotel hard work and it is only really a profitable business once you have a critical mass of people wanting to book all the time.

Typical issues for hotels are also high capital costs to buy the property and the continuous need for refurbishment using up any spare cash flow.

Once a hotel gets a bad credit rating as well the credit card providers start to hold back card sales and may withhold funds. Nearly everyone pays for their hotel room now by card

Pubs, Clubs and Bars 

We deal a lot with the insolvency of pubs. If they are lucky (usually down to a good accountant), they have set up the ownership of the freehold or lease personally but have operated through a limited company.

The reason this is beneficial is that the company can be liquidated, and the debts end with that company closing. The owners can then set up a new company and at least carry on.

Pubs are long hours and lots of hard work with little personal time. Often the owners have a false ‘good’ impression of the cash flow because the VAT is not payable until the end of the quarter but once they get behind with that and the PAYE they will be in trouble very quickly.

One useful insolvency tool we use for pubs is a Voluntary Arrangement – this can be used to freeze the debts whilst the pub is wound down or sold.

Restaurants and Cafes

This is a tough to succesfully.

It is long hours, hard work with very high food and employment costs. There are usually high site costs in rent and rates plus often a usual substantial refurbishment to open. There is very little margin for profit in this sort of business.

The only way restaurants make money is to keep very tight control of the food costs and wages and by being busy and operating near full use of the available covers (customer chairs) all the time. They also need to make sure they keep track of the VAT liability and PAYE so these are paid on time. Once you get into arrears of these costs you quickly get into financial trouble.

In some cases where there is a chain of restaurants then the owners can analyse the profit making and loss making sites and use a pre-pack Administration or Company Voluntary Arrangement to try and rescue parts of the business. For single sites in financial trouble the outcome is usually closure by liquidation.

There have been a number of high-profile failures in this sector in the last few years and this trend will continue.

Email

david@kirks.co.uk

Phone

0808 1961496

Offices

Across the South West, London & Wales

Just a quick email to say a heartfelt thank you for your very calm, considered, expert advice regarding my circumstances on Tuesday. Things looked bleak before you explained my options much more clearly, in simple layman’s terms.
Rob Elliott
Kirks and their team recently advised me on the Members Voluntary Liquidation (‘MVL’) process. They made it very simple for me to understand the process, they kept me up to date with progress throughout the liquidation and expertly answered any queries I had. All interactions with Kirks were highly professional and it gave me confidence that my liquidation was safe in their hands. They promised a straightforward process and certainly delivered – I highly recommend the team at Kirks to assist with your MVL.
Daniel
Kirks provided a very efficient and cost effective service. They offered support and advice throughout the process and made prompt payments. It was a very professional and helpful service.
Richard
We have just had the pleasure of working with Kirks, to complete the closure of my company, everything went smoothly and professionally. I would recommend this company and the staff very very helpful and quickly finalised everything. Thank you Kirks.
Carol Hill
I found you very professional in all my dealings with you. You were knowledgeable and dealt with my case expediently. You answered all my queries on the way in full and everything happened as you said it would in he time frames you outlined in the very beginning. I would have no hesitation in commending you and your company to others
Allan M
We appointed Kirks to manage the process of an MVL when we had ceased trading and found their service to be very straightforward and thorough. A fixed fee arrangement provided us with reassurance and David explained the process clearly to us at the outset. A very professional service all round
David MillsDM digital Solutions
Thanks for all your help guys and for being quick in replying to phone calls and emails
Anon
I have found Kirks Insolvency to be very reliable in terms of their dealings with us as their customers. They are clear in terms of the process and what it entails and are very prompt when it comes to communications. I would recommend their services.
Michale P
I was very impressed with the speed and efficiency with which Kirks undertook the MVL and their help and assistance in explaining the process and resolving any queries.
Anon
Before meeting with Kirks, I had already met with a number of other insolvency practitioners none of whom I considered to be as clear cut and up front as David. The liquidation was executed quickly and professionally and I really am happy that I have done it.
Anon
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Just a quick email to say a heartfelt thank you for your very calm, considered, expert advice regarding my circumstances on Tuesday. Things looked bleak before you explained my options much more clearly, in simple layman’s terms.
Rob Elliott

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David Kirk

Licensed Insolvency Practitioner

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