At Moorfields we have considerable experience in the licensed sector having worked for some of the major Brewers before they effectively ceased providing tied finance to operators to purchase licensed properties. As a result of the discount arrangements offered with free trade loans this was always a more expensive form of finance and attracted the weakest borrowers who had no alternative source of financing. We now act primarily for Banks who are active in this sector and since we started in 2008 we have dealt with over 65 units including pubs, hotels and nightclubs. We have traded units as both administrators and LPA Receivers.

We have a close working relationship with experienced pub operators who are able to supply beer at significant discounts as a result of the buying power they have as a consequence of buying 40,000 barrels a year.  In addition to sourcing beer at very competitive rates they are also able to source wine, spirits, bed linen, utilities and other products required to trade licensed units. By passing some of this discount to the operators of units under our control it is possible to make units viable which otherwise could only trade at a loss as the operator of an individual unit cannot access the discounts available to our management company.

In addition we have been using the Pubco model in order to keep the management fees to a minimum. We have been obtaining vacant possession of a unit then granting a tenancy at will to a new tenant on flexible terms whereby the supply is tied to the management company. This gives the following advantages:

• The beer supply price can be set at a level which enables us to find a tenant
• The price is set at a level whereby the temptation to source the beer from alternative suppliers is removed
• The Receiver/Administrator receives the profit on the sale of the beer
• The tenant has the issues of dealing with VAT, PAYE/NI dealing with employees and preparing accounts.
• As a result the management fees are considerably lower

In situations where the tenant may already operate multiple units and already have access to cheap beer we charge a rent and service charges to maximise the return to the secured creditor. By using such a flexible arrangement we are able to generate the best return possible given the unit and the prospective tenant.

This strategy enables us to keep the pub open and trading at the minimum cost avoiding the loss in value if the unit is closed and incurring the associated security, insurance and maintenance costs.

In some instances the unit may have to be tidied up and traded under management before it reaches a trading level where it is possible to find a tenant.

With larger units it can be more profitable to trade under management than offer a tenancy at will. In these instances the management Company can justify investing more resources in developing trade to maximise profitability

We have also experience of advising secured lenders on SPV formed for the purpose of transferring units which cannot survive on a standalone basis but which can cover their costs when able to access the better beer prices. This can present the opportunity to create an estate which may have a greater value and also enables the properties to be held until the market improves. 

In cases where trading is not viable under any circumstances we are familiar with techniques to mimimise holding costs, for example placing resident guards in vacant properties to comply with the insurers requirements and avoid the costs of physically securing a building and having regular inspections which can be considerable. We are also familiar with exploring the alternative use potential of sites.