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Hospitality supply chain under new insolvency threat

Hospitality supply chain under new insolvency threat

Hospitality supply chain under new insolvency threat

New restrictions in British hospitality settings could spell disaster for the industry, but while affected pubs, bars, cafes and restaurants can access new government funding to pay staff, other businesses in the hospitality supply chain have been placed at serious risk of insolvency.

The government’s new three-tier system, which categorises local areas into either medium, high or very high risk, applying different restrictions according to the perceived risk factor.

The Liverpool City region was the only locality immediately placed under the harshest tier three restrictions, but other local areas including Greater Manchester and parts of Lancashire look set to follow in the coming days and weeks. 

In the highest risk areas pubs, bars, gyms and casinos must close to help stop the virus spreading. It also places more severe restrictions on household mixing, meaning that people must not mix with anyone outside their household or support bubble in any indoor or outdoor setting.

This means that, although restaurants and pubs that operate like restaurants can still operate, takings are likely to drop off.

In order to support jobs at businesses affected by the new restrictions, the government also announced that the Job Support Scheme would be expanded to support businesses that were required to close their doors.

Firms that are legally required to shut for a period of time over winter will receive grants covering two-thirds of each employee’s salary, up to a maximum of £2,100 per month.

Unfortunately, however, while this will cover hospitality businesses that need to close, it will not extend to other businesses in the supply chain, putting many of them at risk of insolvency.

Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency said: “In what has already been a difficult trading year for many businesses in the hospitality sector, new lockdown restrictions will likely result in many more businesses seeking some kind of insolvency package.

“I would encourage anyone that’s worried about the future to speak to a professional as soon as possible.”

For more information about company insolvency services, speak to a member of our team today. Call: 0800 611 8888.