Over 75% of hospitality businesses at risk of insolvency; Virgin Atlantic files for bankruptcy; betting shops lose business; and a sushi chain's CVA
The trade magazine UK Hospitality has surveyed its readers and found the shocking news that over three-quarters of all pubs, cafes, restaurants and hotels in the UK may go bust this year.
Writing for the website James McAllister reported: “More than three-quarters of hospitality businesses in the UK are at risk of falling into insolvency within the next 12 months, according to UKHospitality. A survey by the trade body, carried out in partnership with CGA, shows that one in five are at significant risk of insolvency, or expect insolvency, within a year. More than half of businesses believe there is a slight risk; while fewer than one-quarter of hospitality businesses are facing no risk. The research further highlights scale of crisis facing hospitality sector as it attempts to recover following the Government-mandated lockdown of the industry. UKHospitality warns that unless further 'decisive support' is provided by the Government, many businesses will face ruin and hundreds of thousands of jobs will be lost.”
Ian Carrotte of ICSM Credit warned members of the credit intelligence group that granting extended credit terms to the hospitality left suppliers vulnerable. “Although many businesses are dormant in the hospitality sector while they await the green light to fully reopen, suppliers to a wide swathe in the industry are waiting to be paid for invoices pre-lock down. Giving more credit could be fatal if the numbers given are true. The number of pubs and restaurants listed as insolvent every day by Company House is shocking.”
Virgin Atlantic files for bankruptcy
Airline News have reported that Richard Branson’s Virgin Atlantic has filed for bankruptcy in the USA. The UK-based airline is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country. The trade monitor reported: “It is the second Virgin-branded airline to struggle this year. Virgin Australia went into administration in April. Meanwhile, Virgin Australia's new owner Bain Capital is set to cut 3,000 jobs. Virgin Atlantic's US bankruptcy court filing said it had negotiated a deal with stakeholders ‘for a consensual recapitalization’ that will get debt off its balance sheet and ‘immediately position it for sustainable long-term growth.’"
ICSM Credit said the airline industry was in crisis due to Covid-19 hitting the holiday industry, business travel and the airports themselves. The move comes less than a month after the company said it had agreed a £1.2bn rescue deal in which the Virgin Group injected £200m in order to save the business.
Betting shops in trouble
ICSM Credit have issued a warning over the crisis in the high street betting shop industry as William Hill announced the closure of 119 of their shops.
Ian Carrotte said any business with a high street presence was feeling the pinch as foot fall had dropped during the pandemic. He also noted the betting industry in general had not been so affected as on-line gambling had risen during the lockdowns and William Hill’s profits had held up during the last six months. The betting company said they would repay the funds received from the UK furlough scheme as if to prove the point.
Sushi food chain plans CVA
Company Rescue has reported another knock on effect of the mass move to working from home due to the pandemic. They said the grab-and-go sushi chain, Itsu has launched a CVA to secure rent cuts at 53 of its 77 sites.
They reported: “Itsu relies on office workers mainly in the big cities and has been hit hard by the pandemic. Alix Partners has been appointed to prepare the proposal to the creditors which will be put to them on the 19th August. It is not expected that many of the sites will be closed at this stage. In a cruel twist the company said that pre pandemic its sales were at record levels. The company will be introducing cost savings and Covid-compliant procedures to try and survive, such as online ordering and self-service using the latest technology.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk