Creditors are benefiting by receiving these regular monthly repayments rather than risk receiving nothing at all should the hotel have ceased trading altogether. The hotel is able to continue trading with the security that their outgoings for existing borrowing is set for the next five years. The appointed insolvency practitioner then explored a range of long-term options, and it was eventually decided that the hotel was indeed viable but needed support from creditors to ease financial pressures in the short term.Ī CVA was proposed and following further negotiations, this was agreed by creditors – including HMRC - and became legally-binding on all parties. When the insolvency practitioner was confident that it was, the company applied for a government-backed bounce back loan to provide the funds needed to reopen the hotel, purchase supplies, and bring back staff.
The first step was to determine whether the hotel was viable. The owners contacted Real Business Rescue for guidance as to what they could do to save the business. Although restrictions on hotel stays was lifted, with no cash flow, reopening the hotel was going to prove challenging. With the hotel carrying debt accrued as part of the start-up costs of the business, and with no money coming in, cash flow was tight, and threatened the future of the hotel. When the COVID-19 pandemic hit, the hotel was forced to temporarily close with all staff were put on furlough. Based near a train station in a busy city, the hotel catered mainly for business travellers from across the country, although it also did steady weekend trade from those visiting to enjoy the retail and leisure activities offered by the city.
How we helped Tom's hotelĪs a new business, Tom’s aparthotel was popular, but yet to turn much of a profit. If it is, we will take control of the whole process once appointed if, however, there is a chance to save your hotel from closure, we will explore a range of rescue and recovery options to get your hotel back on its feet. Liquidating your hotel is unlikely to be a prospect you are relishing, however, this process will allow for eligible staff to claim redundancy, protect your existing creditors from incurring further losses, as well as ensuring you as director are adhering to your legal responsibilities at this time.Īn insolvency practitioner will be able to talk you through the entire liquidation process and determine whether liquidation is right for your hotel. This process can only be entered into under the guidance of a licensed insolvency practitioner whose role it will be to identify and realise company assets, deal with creditors on your behalf, and to wind down your hotel in an orderly manner. The liquidation of an insolvent hotel is done through a formal insolvency procedure known as a Creditors’ Voluntary Liquidation – or CVL. Liquidation is the final straw for insolvent companies, however, if you believe your hotel has reached the end of the road, this could be the best option for your business, your staff, and also your creditors. If your hotel is experiencing financial distress, or you are worried what the future holds, it is vital you take expert advice as a matter of urgency and ensure you understand of all of your options.ĭepending on the financial position of your hotel and the prospects for this improving, you may be considering placing your hotel into liquidation.
Soaring running costs and dampened demand for overnight stays threatens to have long-term repercussions on an industry which found itself badly hit by the various national lockdowns and local restrictions during the pandemic. Rescue, Recovery, and Closure Options for HotelsĪn unwelcome combination of Brexit and the global Covid-19 pandemic has left the future of the travel and accommodation business in a state of uncertainty.
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