How to liquidate your Event
Event management is a dynamic sector that’s always changing due to new technologies and emerging trends. The move to online event hosting during the pandemic is just one example of change, and led to the growth of hybrid events where people attend in person and virtually.
Although these changes enable higher attendance, the complexity of managing events can leave some businesses at risk of serious financial difficulty. With such diverse requirements, from logistics to catering and ticketing, it’s unsurprising when insolvency becomes prevalent in the sector.
What challenges are events companies in Scotland facing?
The potential damage from instant online feedback
The opportunity to leave instant feedback online can create reputational issues that cloud the future of event businesses. A single negative comment may damage their reputation for some time and restrict growth.
Complexity of hybrid event management
The logistics of managing hybrid events can be challenging, such as ensuring in-person and online aspects merge seamlessly on the day. They may require an investment in skilled staff and reliable technology to deliver successfully.
Cyber security issues
Using new and emerging technologies increases cyber security risks in the events sector – for example, data breaches when tickets are purchased, or hacker attacks.
Can an insolvent events business be rescued?
Not all insolvent businesses have to be liquidated and some go on to trade successfully. There are various options for rescue if a company is deemed to be viable for the future, and one potential avenue is a Company Voluntary Arrangement (CVA), which formally restructures a company’s debt.
Liquidation in the events sector in Scotland
Liquidation is a procedure that can be used to close an events business, whether it’s solvent or insolvent:
What is Creditors’ Voluntary Liquidation (CVL)?
Creditors’ Voluntary Liquidation is an official process that enables a company to close down when it has unmanageable debt. The appointed liquidator sells the business’s assets at auction and creditors are repaid as much as the proceeds allow.
When a company becomes insolvent, the directors must prioritise their creditors’ interests to prevent unnecessary financial loss. CVL allows for this and also enables directors to claim statutory redundancy pay if they’ve worked for the company under an employment contract.
What is Members’ Voluntary Liquidation (MVL)
Members’ Voluntary Liquidation is only suitable for solvent companies. It also results in the business being closed, but in this case, creditors are paid in full. It’s a tax-efficient process as distributions are taxed as capital rather than income.
MVL might be used to close a company when the director wants to retire or if the business has simply run its course, and can be the best option if its distributable profits are £25,000 or more.
How to start the liquidation process
Only a licensed insolvency practitioner can liquidate a business and when a company enters insolvency it’s incumbent on the directors to seek this type of professional assistance. The IP will assess the company’s situation and provide guidance as to the correct way forward.
Scotland Liquidators helps company directors in Scotland to close down their businesses in the most suitable manner. We understand the issues that events companies face and provide the independent advice needed.
