Re-evaluating the Future – BDO’s David Warnock shares his views
“The hospitality sector and those businesses and individuals that are reliant on the industry have faced one of the most challenging 9 months on record and unfortunately it is not getting any easier” says BDO Director David Warnock.
“Health and safety for customers and employees has been at the heart of the industry’s response and the latest announcement by the Executive of a further 2-week circuit breaker is yet another blow for an industry that has done all it can to re-open in a safe and controlled manner.
Additional expenditure
“Not only has the industry incurred additional expenditure on safety measures, but it is also having to meet ongoing costs whilst closed; this is simply not sustainable. As part of the Hospitality Industry Response Group, we at BDO NI, continue to work alongside other group members to engage with the local Ministers to address the key issues facing the industry and to continue lobbying the Executive for meaningful levels of financial support.
Strategic plan
“Now more than ever, it is crucial that operators have a strategic plan in place and are taking the right advice in relation to their businesses. Over the last 9 months, our team at BDO NI has worked with clients to overcome the challenges of Covid-19, reviewing all options available and tailoring the approach best suited to the needs of their business.
“Through hard earned experience we have an idea of what could lie ahead and we are confident in saying that those business owners who take early action are most likely to get through this period of uncertainty.
High profile restructuring plans
“In the wider hospitality marketspace, we are already seeing a number of high profile restructuring plans being implemented, with the likes of Caffé Nero, Revolution Bar Group, Pizza Express and Travelodge, turning to a Company Voluntary Arrangement (“CVA”) to facilitate a reorganisation of their operations.
“Processes such as a CVA can be used to address underperforming, over-rented or unprofitable sites and can have a significant impact on the survivability of businesses in these difficult times.
New Finance Act 2020
“However, with the introduction of the new Finance Act on 1st December 2020 which will restore HMRC’s rights as a preferential creditor on insolvency, a CVA is not a guaranteed outcome. Companies with large HMRC arrears facing cash flow pressures will need to carefully consider all the restructuring options that are available and it is recommended that professional advice is sought as early as possible.
“Having worked with many hospitality businesses over the last 30 years, we at BDO NI, are proud to support the sector and we will continue to work alongside you all to ensure that the industry returns even stronger in the future.”
David Warnock FCA is a Director in the BDO NI advisory team and can be contacted on +44 (0) 7813 950 463 or david.warnock@bdoni.com
