Opinion

Carluccio’s and BrightHouse:
COVID-19 the final straw?

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Carluccio’s and BrightHouse: COVID-19 the final straw?

Published: 3rd April 2020
Area: Corporate Restructuring & Insolvency
Author(s): Andrew Taylor ,

It’s clear to see that the Coronavirus outbreak has hit many restaurant, retail and leisure businesses hard, with a considerable number of collapses sadly very likely over the coming weeks.

COVID-19 doesn’t discriminate either, as large chains, as well as smaller companies, struggle to stay afloat.

No business is immune

This was shown on 30 March, when the Carluccio’s restaurant chain and rent-to-own retailer, BrightHouse, both collapsed into administration, putting the jobs of over 4,400 employees at risk.

While both businesses had been facing hard times, it appears that the Coronavirus pandemic was the straw that broke the camel’s back.

Supporting employees

The administrators of Carluccio’s and BrightHouse will looking to preserve the businesses and the employees’ futures, working where appropriate with HMRC under the Coronavirus Job Retention Scheme.

This is a temporary scheme open to all UK employers, allowing them to claim 80 percent of their employees’ usual monthly salary, capped at £2,500 a month. Where a company is in administration, the administrators are able to access the scheme on its behalf.

Maintaining cash flow

These unprecedented times are taking their toll on the casual dining sector, with the few restaurants and cafes that are still open for business now reliant on takeaway and delivery custom.

The Government has stated its intention to get money moving to businesses, immediately recognising the imminent threat of insolvencies in many sectors. However, it remains to be seen how and when the processes for accessing funds and the payment mechanisms will actually be in place.

The Government has today acknowledged the widespread concerns in this regard and introduced further measures.  For example, banks will be prevented from asking company owners to personally guarantee loans when borrowing up to £250,000 under the Coronavirus Business Interruption Loan Scheme.  Additionally, the requirement for companies to have first tried to get a normal commercial loan elsewhere will be dropped.

At present, cash is king and, for those businesses without cash or access to credit lines, there is a need to understand their position immediately, to protect themselves against the financial damage from coronavirus.

If you have concerns about the future of your business, contact Michael Mulligan on 020 7264 4432 or speak to another member of our restructuring, recoveries & insolvency team in your local office.

You can register for one of our online webinars, or contact the events team for more details. For more general business advice in relation to coronavirus visit our dedicated resource hub.

For advice or guidance on any other legal issue, a member of our team can help – please click here to discuss.

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