Licensing consequences of insolvency demand prompt action by landlords and insolvency practitioners alike

Following on from her “Cumulative success in the remote licensing sphere” posting earlier this month, Suzanne Davies reveals another of her recent licensing successes, that will be of particular interest to (a) landlords and (b) insolvency practitioners who are appointed as a Liquidator or Administrator or who are working on a CVA alongside an operator of hospitality premises licensed under the Licensing Act 2003.

It is sadly part of the new commercial landscape that many businesses are understandably not able to financially withstand several months of closure, reduced capacities on re-opening, the extra expense of complying with Covid-19 regulations and related Government Guidance and, now, the mandatory 10pm curfew.

Regrettably, as a result many businesses have already become insolvent and, if the gloomy predictions are accurate, there will be many more to come.

The ramifications of a premises licence holder becoming insolvent is that the premises licence itself could be lost unless swift action is taken following the insolvency catalyst.  Once insolvency occurs, the premises licence lapses and, unless an appropriate application is made within 28 days of the catalyst occurring, the licence will expire. 

The good news – from the perspective of either:

  1. the landlord of the premises (i.e. freeholder or long leaseholder) trying to protect the premises licence to better enable a successful re-marketing of the premises, or
  2. an insolvency practitioner appointed as a Liquidator or Administrator (or working on a CVA alongside an operator) trying to protect the premises licence – a valuable asset of the business,

is that, if an appropriate licensing application is made in time, the premises licence will be ‘revived’ and can continue to operate as usual.

Recently I have been approached by a number of landlords to assist them with reviving licences that have lapsed due to insolvency situations arising. 

For the most part, I have been able to advise that there was time to lodge the appropriate applications and protect the licences.  However, on several occasions it has not been possible to provide such good news, usually because the information about the appointment of an insolvency practitioner has not reached the landlord in time. In those circumstances, where the insolvency practitioner has failed to make an appropriate application and it is now too late for the landlord to do so, the premises licence cannot be revived.

I was recently instructed in such a case in the heart of Westminster where the notice of appointment of an Administrator had not reached the landlord within the requisite period, due to the details being sent to the wrong address.  In order for the landlord to be able to market the property with the benefit of a premises licence, it was accordingly necessary to apply for a wholly new such licence.  

The difficulty in that situation is that an application for a new licence (both in the heart of Westminster and in many other towns and cities around the country) falls to be considered under the Licensing Authority’s cumulative impact policy, with the consequence that any application for a new premises licence carries with it a presumption of refusal. In such circumstances, the onus is on the Applicant to demonstrate to the satisfaction of the Licensing Committee that the application should be granted as an exception to policy.

In this particular case, I was delighted to be able to advise my landlord client that the scenario it found itself in would fall to be considered as an exception to Westminster’s policy.  That was because this particular policy states:

“Applications for new licences to replace licences which have lapsed because of the failure to submit an interim authority notice in due time in the event of the death or insolvency of a licence holder will be considered by the licensing authority as possible exceptions”.  

However, this does not provide an unlimited ‘getout’.  Whilst the new premises licence may be granted with conditions that replicate those of the expired licence, on ‘good practice’ grounds the Licensing Committee can also impose conditions that bring the licence in line with those on other premises licences within its area. This can mean that a premises licence with more onerous conditions is granted. Even worse, if representations opposing the application have been made, indicating that there have previously been crime, noise or other nuisance related problems with the premises, then all bets are off.

Back to my case – I am delighted to say that, following carefully thought through discussions with the relevant Authorities, resulting in the adoption of a pragmatic approach by all concerned, representations were avoided and the new premises licence was granted unopposed, without the need for a hearing. In addition, I had a very satisfied and grateful client. That’s always a great plus!

A premises licence is a very valuable asset, especially those granted in areas that are subject to cumulative impact policies.  The moral of this tale is that, where licensed premises are concerned and an insolvency occurs, specialist licensing advice must be sought as a matter of extreme urgency.  

So, whether you are a landlord, an insolvency practitioner or an operator working (or intending to work) with such a practitioner on a CVA, you know where I am – I would be delighted to help you.

NOTE: You can find out more on this subject in:

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