Hosts taking IVAs will forfeit pub licence
Licensees who take out individual voluntary arrangements (IVAs) to ease their financial problems face the almost certain loss of their pub business, trade leaders have warned.
Hosts hoping to ease their debts through an IVA face the automatic loss of their premises licence, and many more could breach their lease or tenancy.
The warnings follow the case of Punch licensee Robert Henderson, who was forced to forfeit his lease at the Wise Man, West Stafford, Dorset, after taking out an IVA.
Federation of Licensed Victuallers Associations chief executive Tony Payne said: “The conditions of many pubco agreements also state that an IVA means the automatic forfeiture of a lease.
“Clearly as the economic situation worsens and licensees struggle, more may be tempted to turn to IVAs as a solution. My advice would be for any host in this situation to come clean with their pubco and ask them for help.”
MA legal editor Peter Coulson said: “If a licensee becomes insolvent through an IVA or bankruptcy, they automatically lose their premises licence.”
Punch discovered Henderson had taken out an IVA 12 months after the event, following a legal search over a long-term repairs and refurbishment dispute with the licensee.
He did not owe Punch money, so it was not automatically told of the IVA.
“I was horrified when I discovered that an IVA meant I had to forfeit the lease — nobody ever advised me about this,” he said.
An IVA is a formal agreement between an individual and creditors to secure reduced payments of debts and is seen as a more palatable alternative to formal bankruptcy.
It allows a percentage of the debts to be paid off if 75% of creditors agree, and the arrangement normally lasts up to five years. These agreements have to be set up by a licensed professional insolvency practitioner.
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