Don’t forget the licensing implications of an insolvency

I have little doubt the technicalities of licensing law are not top of your list of priorities at the moment, but when it comes to insolvency​ of the premises licence holder this does have a profound effect on the premises licence and it is important to know what that effect is. 

A premises licence is an asset to the holder be they a company or a person.  If it is lost then it may be very difficult to obtain a new licence with the same hours, activities and perhaps even less stringent conditions than the previous one. 

In towns and cities with strict cumulative impact zones it may indeed be impossible to get a licence at all, at least on the same terms.  Protecting the licence, even in an insolvency, is often therefore a priority, not least for insolvency practitioners. 

The bottom line is if the holder of a licence becomes insolvent or dies then the licence lapses immediately. 

Automatic outcome​

This happens by automatic operation of law and does not require any notice or action on the part of anyone.

The specific time and date of any given insolvency will depend upon what type of insolvency it is. 

It may be a liquidation, a company or an individual voluntary arrangement or the appointment of administrators or an administrative receiver. 

Each of these has a specific time under Company and Insolvency Law when that insolvency technically takes place, but in all cases the licence lapses at that moment. 

Licensable activities cannot take place under the authority of that licence from that moment on. 

The lapsed licence can, however, be reinstated by way of a transfer to an ‘active’ company or person as long as a transfer application is made within 28 days of the original insolvency event/lapse. 

Transfer information​

This transfer could be to a pub management company, an insolvency practitioner (there is a specific form of application for insolvency practitioners called an Interim Authority which effectively serves the same purpose), a new tenant (if you can find one quickly enough) or indeed to the landlord. 

As long as the applicant for the transfer can legitimately say that they would be in a position to use the premises for licensable activities then you should have no issues with the licensing authority in reinstating the licence.  Subsequent transfers, perhaps to a longer-term tenant can be made at a more leisurely pace.

The critical point is you must recognise when an insolvency/lapse is about to take place or has taken place and to take action to reinstate the premises licence within 28 days of that lapse. 

If you do not, then except in very limited circumstances the licence lapses irrevocably and cannot be reinstated, the only option being to apply for a new licence, with the potential hurdles mentioned above. 

The biggest risk I see in practice is in all the operational, legal and financial dealings that occur when a company is struggling, licensing law can be overlooked. 

This does not need to be so and whatever the final outcome of any insolvency the premises licence can often be maintained and kept as a live asset, reducing the risks, costs and delay of having to apply for a new one.

• Andy Grimsey is a senior consultant solicitor at ​Poppleston Allen​​