How to liquidate your hospitality business in the UK

The hospitality business in the UK has encountered more complex financial challenges, with reduced cash flow leading to insolvency in many cases. Some companies may experience company liquidation, which means they will permanently close and go through the liquidation process.

The sector is a vital component of UK's tourism industry, and while it provides numerous job opportunities for locals, labour shortages are making it harder for lodging establishments to run with development in mind. In reality, many in the business are experiencing serious financial difficulties, sometimes leading to the liquidation process.

What problems are facing the hospitality industry in the UK?

Vacant staff openings

Hospitality businesses that do not have enough workers cannot operate properly or deliver the services that they would in economically good times, making a business transfer or sale more appealing. This restricts income opportunities and leads the company to contract or remain static rather than grow, which may result in the company entering the liquidation process.

Increasing supplier costs, food, and services

The growing expenses of operating in the industry, including energy and food, as well as rising vendor expense, make it difficult to budget efficiently, which is critical for maintaining cash flow control and avoiding cash shortages.

Cost of living crisis.

The cost of living crisis is reducing customer spending on non-essential items, harming the hospitality industry as a whole, and potentially leading to a business sale. Declining numbers of visitors and the aftermath of Covid-19 make it tough to remain in business with assurance, sometimes necessitating a business sale.

What does it mean to liquidate your business within the UK hospitality sector?

Liquidation can occur once a business falls into financial insolvency, which implies it is unable to pay its debts as they become payable, and may require appointing a liquidator. Insolvent liquidation leads to the closure of a business through a process known as Creditors’ Voluntary Liquidation (CVL) or even compulsory liquidation.

When a firm has a good cash flow and can pay its debts, another liquidation procedure, known as Members’ Voluntary Liquidation, might ensure that it is closed down in a structured way – for example, if the owner wishes to retire.

Creditors’ Voluntary Liquidation in Hospitality Organisations

The goal of CVL is safeguard corporate creditors’ financial interests and avoid undue losses while ending a business through the liquidation process. It also ensures that the company’s directors comply with insolvency laws. The procedure is carried out by a licenced insolvency practitioner (IP), who winds up the company’s operations and pays back creditors as much as feasible from the asset sale proceeds.

Members’ Voluntary Liquidation in the UK Hospitality Industry

MVL is also governed by a licenced IP, but this time the company is solvent. This signifies that the company makes a distribution to its shareholders based on the liquidation process. This is subject to Capital Gains Tax (CGT), which provides significant tax benefits to hotels and hospitality firms with retained profits of £25,000 or more.

What to do if you think your UK hospitality business can be rescued

In some cases, an insolvent firm can be salvaged, and the UK has a number of potential recovery possibilities. Such as Company Voluntary Arrangements (CVAs) and company administration, which provide hope to business owners battling to withstand the economic downturn and avoiding compulsory liquidation.

A licenced professional must determine whether a firm is feasible in the future or if it should appoint liquidators to proceed with the liquidation process. McLaren Insolvency Practitioners specialise in assisting directors of solvent and bankrupt hotels and hospitality venues in closing down, and may offer the expert advice required in this situation, including appointing liquidators.

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PREMIUM SERVICES

Our Services

Bounce Back Loans Assistance

If you're struggling with repayments or have questions about your Bounce Back Loan, we're here to help. Our experts will guide you through the process and explore options tailored to your specific circumstances.

VAT Debt Resolution

Unresolved VAT issues can be a significant burden. Our experienced team will work tirelessly to find the best solutions for your VAT-related challenges.

HMRC Debt Support

Dealing with HMRC debt demands can be daunting. Our experts will negotiate with HMRC on your behalf, helping you find manageable solutions and preventing further financial strain.

IR35 Compliance

Understanding and navigating IR35 regulations is crucial for contractors and businesses. We offer comprehensive guidance to ensure compliance, minimizing potential penalties and liabilities.

Winding Up Orders

Facing a winding-up order can be distressing. Our dedicated team will help you explore all available options, potentially saving your business and livelihood.

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HMRC Debt Assistance

HMRC debt can cause a significant strain on business finances. If ignored HMRC can often instigate winding up action. As a Director you should contact a licensed practitioner before this happens to ensure you are protected.

Bounce Back Loans Assistance

Navigating the complexities of government-backed loans, such as bounce back loans, can be overwhelming. Our experts are here to guide you through the process, helping you secure the financial assistance your business needs.

Why Choose McLaren Group?

Expertise

Our expert team offer director focused liquidation solutions. Helping with Bounce back loans, HMRC debts, supplier debts and much more. We understand the challenges many company directors have had since covid and provide tailored solutions to suit your situation.

Personalized Service

We believe in a client-centric approach. Every business is unique, and we tailor our services to meet your specific needs and goals.

Results-Driven Approach

We focus on delivering tangible results and will support you through the full process of closing your company. We offer a simplified director focused liquidation which will ensure your personal credit isn’t impacted.

Save Time and Resources

Our fully qualified team of Insolvency experts will help take the strain of creditor pressure away. Save you time & resources by contacting any creditors on your behalf and ensuring you get the right advice on closing your struggling company.

Transform Challenges into Opportunities with McLaren Group.

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Don’t let financial challenges hold you back from your business goals. Reach out to McLaren Insolvency Practitioners Glasgow today to discuss your specific needs and discover how our comprehensive services can help when you are struggling with business debts.