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25 February 2009
Figures for the third quarter of 2008 highlighted that pubs,
bars, restaurants and hotels have been one of the hardest hit by
the economic slowdown. The results for Q4 2008 (analysed on 6
February 2009) saw an increasing number of hospitality and leisure
administrations, with 251 insolvencies; a 54% increase on the same
quarter last year. This is reflected in the number of insolvent
hospitality and leisure companies, which has increased by 95% in
the past two years.
As an insolvency practitioner these figures are likely to mean
that business is booming at the moment. However, there are certain
things that you should note in relation to this particular sector
before insolvency proceedings are instituted:
- Pubs, bars, restaurants and hotels all require a premises
licence under the Licensing Act 2003 (the 'Act'). This is because
most activities that take place on these premises are 'licensable
activities'. Licensable activities include the sale of alcohol, the
provision of entertainment, and after 11.00pm the sale of hot
food
- The holder of a premises licence may be either a company or an
individual
- If the holder of a premises licence becomes insolvent the
licence will lapse. Insolvency is widely defined under the Act to
include the approval of voluntary arrangements, bankruptcy orders,
liquidations and administrations
- The lapse of a premises licence precludes any further trading
in respect of licensable activities at those premises
- However, there is protection afforded to insolvency
practitioners under the Act so that he may continue trading in
respect of licensable activities
- The insolvency practitioner may, during the initial seven day
period from when a premises licence has lapsed, give to the
relevant Licensing Authority a Notice in respect of the licence.
This effectively involves the insolvency practitioner taking on the
responsibility for the Premises Licence on a temporary basis until
it can be transferred to the third party
The fee that accompanies the Notice is only £23. However, should
you fail to serve the authority with a Notice, the licence will
lapse and you will therefore be unable to carry on trading at the
premises in respect of licensable activities – imagine a bar with
no alcohol!
Should you find yourself in this situation, in order to commence
trading in respect of licensable activities you will have to make
an application for a new premises licence. This can be slow and
costly!
You must also be cautious not to carry out licensable activities
without a premises licence. To do so would be in breach of the Act
and may lead to imprisonment for a term not exceeding six months,
or to a fine not exceeding £20,000, or both.
Our experienced Licensing team can assist with all licensing
aspects that may arise throughout the insolvency process and ensure
that you do not fall foul of the Act.
talk to us
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The content of this bulletin is provided for the purposes of
general interest and information. It contains only brief summaries
of aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
not provide a substitute for it.