Clarke Willmott

LOSS OF PUB LICENCE THROUGH INSOLVENCY “NOT ABSOLUTE”

Help at hand for licensees facing the loss of their business when entering into IVAs (individual voluntary arrangements), thanks to Clarke Willmott

Hosts facing the automatic loss of their premises licence because they have become insolvent have been thrown a lifeline.

With the country in the grip of recession many licensees are struggling financially and have been tempted to turn to IVAs – formal agreements between an individual and creditors to secure reduced payments of debts – as a solution.

However, as many hosts are now finding out, the fact they have effectively become insolvent through entering into an IVA or bankruptcy means they automatically lose their premises licence.

Yet this does not necessarily mean “calling time” on a host‘s licence, according to Philip Winterborne, partner in the restructuring and insolvency team at law firm Clarke Willmott.

“Though it‘s true to say the premises licence lapses on insolvency it can be protected in two ways,” said Mr Winterborne.

“First is if the licence is transferred within seven days of it lapsing, either to a supervisor or third party.

“Alternatively they could complete an interim authority notice. Again, there is no reason why a supervisor can‘t hold this.

The issue of insolvency and automatic loss of a host‘s premises licence came into sharp focus following the case of Dorset-based Punch licensee Robert Henderson who was forced to forfeit his lease after taking out an IVA.

Mr Henderson said he had no idea entering into an IVA would mean the automatic loss of his licence and lease, but Punch was unequivocal that this was an express term of all its leases.

Mr Winterborne commented: “The main point here is that loss of a licence and/ or the premises lease through insolvency is not as absolute as many people think and doesn‘t necessarily have to lead to the loss of the pub at all.

“With a bit of strategy and pre-planning a plan for the survival of the business might be put together and the licence preserved. Logically the pub companies should then take the commercial view that a continuing business has more value than a boarded up shell.”

ENDS 31st March 2009

For further information please contact Louie Hadley, Sturgess Van Damme, on 01275 349011 or email louie@sturgessvandamme.co.uk