However, all of these events actually take place as a result of usually quite a long process of decline, lack of management, failure of communication or some other cause.
These events have sole operators and chief execs of big companies running around like headless chickens, so you want to steer well clear of all of them.
- Lapse of premises licence due to insolvency
Whether the holder of premises licence is a company or an individual, if they become insolvent then the licence lapses immediately. There are various definitions of insolvency, but they include Company Voluntary Arrangements, bankruptcy, liquidation, administration and the company being dissolved.
If this happens, it happens as an operation of law - there is no phone call from the licensing authority or Companies House giving you warning, or an email to let you know that your licence has lapsed. From the moment the licence lapses no licensable activities can take place under that licence. There is no hearing or appeal.
The only option is, within 28 days of the lapsing of the licence, to apply to reinstate it by transferring the licence to another ‘solvent’ holder, or for Insolvency Practitioners to apply for an interim authority.
If that is not done then the licence is dead irrevocably and it can be extremely hard to reapply for a new licence in the same area, with the same favourable hours and conditions, particularly in cumulative impact zones.
There is no reason why the lapse of a licence should happen or at least happen without notice. When a company is in difficulty, then certain things are prioritised and others are not.
Licensing often doesn’t come high up the list but selling alcohol and providing entertainment are core activities to a licensed business, and you can’t do them without a premises licence (well, not for very long with Temporary Event Notices, anyway).
Therefore, maintaining the premises licence as a valuable asset is critical, even if the company is failing. Don’t put the premises licence at the bottom of the pile, even if things are looking bleak. They can be an extremely powerful negotiating tool and often have a financial value in themselves.
- Licence suspension after a summary review interim steps hearing
This is admittedly a rare occurrence but can still happen with devastating consequences. What usually happens is there is an incident of serious violence or disorder at or near the premises, which a police superintendent decides is because of some failure at the premises to promote the licensing objectives.
The superintendent signs a certificate to that effect and one of his or her officers applies for a summary review of your premises licence. You may not know anything about this happening.
There can be a hearing, even by telephone with the licensing subcommittee, who can decide to suspend your premises licence even with you not there. The first you would hear about it is receiving a notice to that effect from the licensing authority.
You are entitled once this has happened to request your own hearing to make representations against those interim steps, but usually the damage is done and it is very difficult to overturn those interim steps without convincing evidence.
The most common decision at the initial interim steps hearing is a suspension of the licence which means you cannot trade until either your own hearing turns out favourably or the final review which 28 days later.
Either way, this could kill the business.
Again, often these things do not happen out of the blue. If there are genuinely violent incidents or disorder at the premises, this could often be due to failures in management, although not every time of course, and the police are getting better at distinguishing between a violent incident that has simply happened near or even on a premises that was nothing to do with licensable activities, and those that were.
- Failure to pay the licence fee
This is obvious. Every year you must pay an annual fee that can range from around £100 to around £2,000, or indeed more if you are a large festival or event.
If this is not paid, and requests from the licensing authority finance department are ignored, then the licensing authority is entitled to suspend the licence.
This again means you cannot trade until that fee has been paid. Again, it really shouldn’t come out of the blue – the annual fee must be paid and it is better to just get it done.
Remember also if you are looking to acquire premises, check the annual fee has been paid. The licence could have been suspended, possibly for a failure to pay several years’ worth of the licence fee, which you will be liable to pay if you want to get the licence reinstated and open to trade upon transfer.
My main point about these so-called ‘silent killers’ is that in most cases - certainly in my experience – they are not very silent at all.
Most (not all) violent incidents have an underlying cause that may date back way before the incident itself, there may be issues to do with who you are letting into the premises, search policies, people having too much to drink, staff training, and the like.
Equally, a company doesn’t become insolvent or fail to pay its annual fee in a vacuum. There will be a history leading up to it.
The point is these things can suddenly result in the removal of the very raison d’etre of a licensed business, in other words the ability to sell alcohol and provide regulated entertainment and late-night refreshment. Just keep an eye on the warning signs.
- Andy Grimsey is a senior associate solicitor at Poppleston Allen
