“Last Call”: Your Options Before the Pub Doors Close
British pubs are woven into the fabric of local life in the UK.
However, rising business rates, higher national insurance costs, increased minimum wage obligations and general inflationary pressures, together with lower footfall, have squeezed margins across the industry. An analysis of official government statistics by tax specialists at Ryan shows that 366 pubs were either demolished or converted to alternative uses in the 12 months to December 2025. These losses reduced the total number of pubs, inclusive of vacant sites, from 38,989 to 38,623 across England and Wales.
For pub owners faced with the threat of insolvency, it is imperative that you understand your obligations to creditors and employees. Any delay in seeking legal advice, especially if you are a company director, might increase your liability and reduce your chances of an orderly wind-down.
Under the Insolvency Act 1986 and Companies Act 2006, directors must take creditors’ interests into account where insolvency is probable or imminent. Continuing to trade when there is no reasonable prospect of rescue can expose directors to wrongful trading claims under section 214 of the Insolvency Act 1986. This can result in personal liability for losses incurred during the period of wrongful trading and, in serious cases of misconduct, director disqualification or other sanctions.
Personal Guarantees and Secured Creditors
It is common practice for pub operators to enter into a lease agreement or borrowing arrangement that includes personal guarantees. This essentially means that if a business fails, lenders are able to pursue the guarantor personally for any outstanding debts.
What should directors do?
Where it becomes apparent that the company has no realistic prospect of avoiding insolvency, directors should consider the following options:
1. Creditors’ Voluntary Liquidation (CVL)
A CVL is appropriate where a company is insolvent and there is no realistic prospect of rescue.
It is a director-initiated, shareholder-approved statutory process, under which:
- directors take steps to place the company into liquidation
- shareholders approve the decision
- a licensed insolvency practitioner is appointed as liquidator
- the liquidator takes control of the company, realises its assets, and distributes funds to creditors in the statutory order of priority
Entering into a CVL at the appropriate time can help directors demonstrate that they are taking steps to minimise losses to creditors.
Compared to compulsory liquidation (where a creditor applies to court), a CVL generally allows greater control over timing and the choice of liquidator.
2. Administration (including Pre-pack Sales)
Administration is a formal insolvency process in which an administrator is appointed to take control of the company, displacing the directors.
The purpose of administration is to:
- rescue the company as a going concern, or
- achieve a better outcome for creditors than liquidation
In practice, the administrator may continue trading the business, restructure operations, or market the business for sale.
In some cases, the business or its assets may be sold as a going concern.
A pre-pack administration involves negotiating a sale prior to the administrator’s appointment and completing it immediately afterwards. This approach is often used to preserve value and maintain business continuity.
Administration may be appropriate where there is still a viable business, even if the company itself cannot be saved.
3. Moratorium
Under the Corporate Insolvency and Governance Act 2020, companies that are or may become insolvent can apply for a moratorium.
This provides a short-term breathing space (typically 20 business days), during which creditor enforcement action is restricted.
During this period:
- directors remain in control of the company
- a licensed insolvency practitioner acts as a monitor, overseeing the process
The moratorium can be extended and is intended to provide time to explore restructuring options where there is a realistic prospect of rescue.
Choosing the right option
The appropriate course of action will depend on the company’s financial position:
- No realistic prospect of rescue → CVL
- Viable business remains → Administration
- Short-term protection needed → Moratorium
Early advice is key to identifying the most appropriate route and reducing potential exposure.
The challenges facing the UK pub sector are significant and, for some operators, unavoidable. But the decisions made in the weeks and months before a business becomes insolvent can have profound legal and financial consequences.
If you are a pub owner or director facing financial distress or closure, early legal advice is essential. For confidential guidance on insolvency risk, director duties and dispute resolution, please contact our litigation team.
Can You Remove a Director for Breaching Their Duties?
The Directors’ Duties Series – Part 2
In our previous article on acting within powers, we introduced one of the key duties owed by directors under UK law.
All company directors must comply with the duties set out in Chapter 2 of Part 10 of the Companies Act 2006.
These duties include:
- Acting within powers
- Promoting the success of the company
- Exercising independent judgment
- Exercising reasonable care, skill and diligence
- Avoiding conflicts of interest
- Not accepting benefits from third parties
- Declaring any interest in a proposed transaction or arrangement
But what happens if a director breaches these duties?
Under English law, limited companies are generally free to determine their own internal governance. As a result, the appropriate route for removing a director will often depend on the company’s specific constitutional and contractual arrangements.
In practice, identifying the correct procedure is not always straightforward, and missteps can lead to disputes or legal challenges. Even where company documents do not provide a clear mechanism, shareholders may still rely on statutory rights under the Companies Act 2006 to remove a director.
Statutory Right of Removal: Procedure and Key Considerations
Under section 168 of the Companies Act 2006, a director can be removed by an ordinary resolution (more than 50% of shareholder votes).
However, strict procedural requirements must be followed including serving special notice must be given (at least 28 days before the meeting), the director must be informed of the proposed removal, has the right to make written representations and given the opportunity to speak at the meeting.
Failure to follow the correct procedure may render the removal invalid.
Breach of Duties and Shareholder Remedies
A breach of directors’ duties does not automatically result in removal, but it can give rise to legal action.
Shareholders may consider:
- Derivative claims
Shareholders may bring a claim on behalf of the company against a director for breach of duty, negligence, or misconduct. - Unfair prejudice petitions (section 994)
Where a director’s conduct unfairly prejudices shareholders’ interests, members may apply to the court for relief.
These remedies are particularly relevant in more serious or contested disputes.
Removing a director is rarely just a procedural step and can involve wider legal and commercial issues. For example:
- The director may also be an employee, giving rise to potential employment law risks, including claims for unfair or wrongful dismissal
- There may be contractual implications under any service agreement or shareholder arrangements
- Disputes can escalate quickly, particularly in closely held or family-run companies
Why Legal Advice Is Important
In light of these overlapping issues, taking legal advice at an early stage can be critical. It helps ensure the correct procedure is followed, manage potential risks, and reduce the likelihood of disputes or costly challenges.
Conclusion
While UK law provides a mechanism for removing a director, the appropriate approach will depend on the company’s governing documents and the specific circumstances. Starting with the company’s Articles of Association, together with taking legal advice where appropriate, can help ensure the process is carried out smoothly and in a legally compliant manner.
At Chan Neill Solicitors LLP, our Corporate and Litigation teams advise on director duties, shareholder disputes, and wider company governance matters, and are well placed to assist with issues arising from the removal of a director.
Restrictive Covenants in Property: What Buyers Should Watch Out For
When purchasing property in England and Wales, buyers often focus on price, location, and condition. However, legal restrictions affecting how a property can be used are sometimes overlooked. One of the most important of these is restrictive covenants, which can significantly limit what an owner can do with their property.
What is a Restrictive Covenant?
Restrictive covenants are often imposed by developers or previous landowners to preserve the character or value of an area and are commonly encountered in residential transactions.
Typical examples include restrictions on building extensions, using the property for business purposes, altering its external appearance, subdividing the property, or parking certain types of vehicles.
Although these restrictions may appear straightforward, their legal effect can be complex. Questions may arise as to whether a covenant remains enforceable and who has the benefit of it. In some cases, even long-standing covenants may still bind current owners.
Consequences of Restrictive Covenants
Restrictive covenants can significantly impact how a property is used or developed, potentially affecting its value and future.
If breached, the party with the benefit of the covenant may take legal action, including seeking an injunction or claiming damages. This can lead to costly disputes or delays, particularly during a sale or refinancing.
Given these risks, it is important to understand the implications of any restrictive covenants affecting a property. Professional advice can help clarify your position and address potential issues.
Conclusion
Restrictive covenants are a key aspect of property due diligence and should not be overlooked. Understanding these restrictions at an early stage can help buyers avoid unexpected limitations and potential disputes.
At Chan Neill Solicitors LLP, our Residential Property team advises clients on all aspects of property transactions, including identifying and managing risks associated with restrictive covenants.