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When the drink runs dry

14 November 2008

In the current economic climate many businesses are battling for survival, and there are daily reports of pubs, hotels, restaurants and clubs becoming insolvent or being repossessed.

If you wish to preserve the added value of retaining a premises licence in the event of an insolvency or repossession then it is imperative you act quickly.

A premises licence authorises premises to carry out licensable activities, including:

In short, it allows pubs, hotels, clubs and restaurants to carry out their critical functions.

The loss of a premises licence and other licences (gaming, performing rights) will affect both the ability to trade the premises in the short-term, and the underlying value of the business in the medium-term.

Repossession

If a premises is repossessed prior to the premises licence holder becoming insolvent, then it is possible to transfer the premises licence into the name of the mortgage lender, thereby preserving value. This will allow the premises to be sold on and begin trading immediately.

Insolvency

Although a premises licence will generally remain in force indefinitely, it can lapse automatically following the insolvency of the licence holder unless action is taken within seven days of the insolvency.
 
The premises licence can be reinstated within seven days through:

Register a property interest on the Licensing Register

There is provision in the Licensing Act 2003 for a party to register a property interest with a licensing authority.

The licensing authority should notify an interested party should there be any changes to the premises’ licence or status of the licence holder (e.g. insolvency). However, it would not be advisable to rely solely on the licensing authority for such notification, as it may be informed of an insolvency beyond the seven day period.

It is our experience that licensing is a complex and specialised area of law governed by tight deadlines and procedures that are often interpreted differently by Licensing Authorities. It is essential to be aware of how to proceed if you are concerned about the effects an insolvency or repossession may have on the underlying value of a licensed premises.

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