shlomo Posted January 7, 2021 Share Posted January 7, 2021 https://www.bbc.co.uk/news/business-55529130 Just when the hospitality sector thought things couldn't get any worse, it has been hit by another lockdown. Last year's rolling closures forced Martin Wolstencroft to borrow £4m just to ensure the survival of Arc Inspirations, a bar chain with 17 venues across the north of England that he has spent the last two decades building into a successful business. And the latest lockdown has forced Mr Wolstencroft to ask his bank to lend him another £1m. He reckons the debt he has taken on so far will take the business six years to pay back, which leaves him facing some difficult decisions. Quote Link to comment Share on other sites More sharing options...
Si1 Posted January 7, 2021 Share Posted January 7, 2021 I'm guessing it's a limited company so not really personal risk? Quote Link to comment Share on other sites More sharing options...
shlomo Posted January 7, 2021 Author Share Posted January 7, 2021 5 minutes ago, Si1 said: I'm guessing it's a limited company so not really personal risk? He has spent in his opinion two decades to build it, I do think the new generation might not go to clubs as much as we did not, due to lockdown they might have unlearned that Quote Link to comment Share on other sites More sharing options...
Si1 Posted January 7, 2021 Share Posted January 7, 2021 3 minutes ago, shlomo said: He has spent in his opinion two decades to build it, I do think the new generation might not go to clubs as much as we did not, due to lockdown they might have unlearned that Yeah he might have done so I have some sympathy. That's lots of emotional and physical investment. But that's business. Quote Link to comment Share on other sites More sharing options...
simon2 Posted January 7, 2021 Share Posted January 7, 2021 Looking at the filing history it isn't a particularly profitable business - loss making in a statutory sense, and on adjusted measures it just seems fairly marginal. What jumps out at me is the directors pay, £943k spent, too many directors for this size of company, four of them share two surnames. Seems a company run for the benefit of its directors, if it shuts the gravy train for them is over. Quote Link to comment Share on other sites More sharing options...
richmondtw Posted January 7, 2021 Share Posted January 7, 2021 who knows we do not know the ins and outs of someone else's business Quote Link to comment Share on other sites More sharing options...
Locke Posted January 7, 2021 Share Posted January 7, 2021 What? Just tell the landlords to bugger off; they aren't getting their rent. Not now, not in the future, not ever. Quote Link to comment Share on other sites More sharing options...
derestricted Posted January 7, 2021 Share Posted January 7, 2021 1 hour ago, shlomo said: He has spent in his opinion two decades to build it, I do think the new generation might not go to clubs as much as we did not, due to lockdown they might have unlearned that not a club goer anymore, but certainly won't be going to the pub as often...if they ever open. Think people have just learnt other ways to meet up and spend time. Quote Link to comment Share on other sites More sharing options...
wighty Posted January 7, 2021 Share Posted January 7, 2021 The house party will make a comeback. Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted January 7, 2021 Share Posted January 7, 2021 (edited) 1 hour ago, simon2 said: Looking at the filing history it isn't a particularly profitable business - loss making in a statutory sense, and on adjusted measures it just seems fairly marginal. What jumps out at me is the directors pay, £943k spent, too many directors for this size of company, four of them share two surnames. Seems a company run for the benefit of its directors, if it shuts the gravy train for them is over. I think you are kind of missing the point. Companies are run to the benefits of their owners whether they be directors or not, although in small business they are often the same people. As an owner you can choose either to take money out as dividends through profit making or take it out via paying yourself a large salary. Which you would prefer is dependent on quite a few things and is usually set up to minimise tax. But a business that pays large director (owner) salaries and produces small profits is no less viable than one that pays small director salaries and produces large profits. Edited January 7, 2021 by Gigantic Purple Slug Quote Link to comment Share on other sites More sharing options...
Warlord Posted January 7, 2021 Share Posted January 7, 2021 2 hours ago, shlomo said: Last year's rolling closures forced Martin Wolstencroft to borrow £4m just to ensure the survival of Arc Inspirations, a bar chain with 17 venues across the north of England that he has spent the last two decades building into a successful business. The NEW economy sadly... Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted January 7, 2021 Share Posted January 7, 2021 2 hours ago, Si1 said: I'm guessing it's a limited company so not really personal risk? Probably personal guarantees in the background. Usually are. Quote Link to comment Share on other sites More sharing options...
simon2 Posted January 7, 2021 Share Posted January 7, 2021 1 hour ago, Gigantic Purple Slug said: I think you are kind of missing the point. Companies are run to the benefits of their owners whether they be directors or not, although in small business they are often the same people. As an owner you can choose either to take money out as dividends through profit making or take it out via paying yourself a large salary. Which you would prefer is dependent on quite a few things and is usually set up to minimise tax. But a business that pays large director (owner) salaries and produces small profits is no less viable than one that pays small director salaries and produces large profits. Don't really have an issue with people paying themselves lots. The article tone seems to be wanting to garner sympathy - was he really 'forced' to take on £4m of debt? I don't think so. That's their choice. It boils down to property. The bar business is not particularly viable, in that it has more liabilities than assets. However, the bars pay rent to a related property holding company that is very viable. If the bars closed today that would be a disaster for them - long voids and reduced rents when they do re-let. So his borrowing of £4m is not really to remain closed, but to ensure one company can keep on making rent payments to another company. Not really anything about jobs as most of them will be non-contract students, or even providing a service as they seem heavily concentrated in one city (Leeds). Quote Link to comment Share on other sites More sharing options...
Warlord Posted January 7, 2021 Share Posted January 7, 2021 Anyone know how Birmingham is faring? When I lived there literally no end of expensively kitted out bars, restaurants, etc. all over the place (Blair/Brown boom). I can imagine they have been utterly devastated by the lockdowns. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted January 7, 2021 Share Posted January 7, 2021 24 minutes ago, simon2 said: Don't really have an issue with people paying themselves lots. The article tone seems to be wanting to garner sympathy - was he really 'forced' to take on £4m of debt? I don't think so. That's their choice. It boils down to property. The bar business is not particularly viable, in that it has more liabilities than assets. However, the bars pay rent to a related property holding company that is very viable. If the bars closed today that would be a disaster for them - long voids and reduced rents when they do re-let. So his borrowing of £4m is not really to remain closed, but to ensure one company can keep on making rent payments to another company. Not really anything about jobs as most of them will be non-contract students, or even providing a service as they seem heavily concentrated in one city (Leeds). Exactly. This is a property company selling drinks. The debt, it to mostly service the santander 400k a quarter debt. Looks like they have loaned them money to pay the interest on the existing loans. Quote Link to comment Share on other sites More sharing options...
Odysseus Posted January 7, 2021 Share Posted January 7, 2021 I’m struggling to understand who would loan him £4m in the first place? Quote Link to comment Share on other sites More sharing options...
satsuma Posted January 7, 2021 Share Posted January 7, 2021 48 minutes ago, Odysseus said: I’m struggling to understand who would loan him £4m in the first place? So I have no idea what assets the business has, however, if they were able to show they have assets to put against the loan then the bank would be willing to back them on the basis that liquidation would recoup the debt. I do also wonder if this is partly debt restructuring. It’s still almost 250k per venue which seems a bit crazy. But then again I’m not a spiv captain of industry so what do I know. Quote Link to comment Share on other sites More sharing options...
shlomo Posted January 7, 2021 Author Share Posted January 7, 2021 1 hour ago, Odysseus said: I’m struggling to understand who would loan him £4m in the first place? Rishi Quote Link to comment Share on other sites More sharing options...
MonsieurCopperCrutch Posted January 7, 2021 Share Posted January 7, 2021 3 hours ago, derestricted said: not a club goer anymore, but certainly won't be going to the pub as often...if they ever open. Think people have just learnt other ways to meet up and spend time. The roaring 20’s happened after the Spanish flu pandemic. Everyone was partying hard. Quote Link to comment Share on other sites More sharing options...
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