Alcohol and Entertainment Licenses were transformed by the Licensing Act 2003, which despite the name, came into force in November 2005. The Act was put in place with the aim of reducing alcohol misuse, reduce crime and disorder, and encourage tourism. It defined 'licensable' activities as:
- Sale by retail of alcohol
- Performance of plays
- Exhibition of films
- Indoor sporting events
- Boxing and Wrestling
- Live music
- Playing recorded music and Dancing
- Late night refreshments
Application must be made to the competent local authority for a Premises License which allows its holder to carry out licensable activities on a specified property, subject to various conditions. The Premises License can be granted to an individual, company or other type of organisation.
However, and this is the important bit, the Premises License lapses if the holder of it becomes insolvent. In the case of an individual becoming insolvent this means entering into an approved Individual Voluntary Arrangement, becoming bankrupt or entering into a deed of arrangement for the benefit of creditors. In the context of a company, becoming insolvent means when it enters into a Company Voluntary Arrangement; when an Administrator or an Administrative Receiver is appointed, or when it goes into liquidation.
When these insolvency events take place, there may be a delay before a new Premises License Holder can be appointed. In order to allow the business to continue trading until there is a formal transfer then someone, with a "prescribed interest", can apply for Interim Authority.
Application for an Interim Authority must be made within 7 days of the date the Licence lapses and Notice of it must be served on the Police.
Failure to apply within the 7 day window will mean the Premises Licence lapses and a new Premises Licence will have to be applied for, with all the consequential costs, delay and risk of it being refused for some past misdemeanour. It's also worth noting that trading without a Premises Licence is an offence which can result in imprisonment for up to 6 months or a fine of up to £20,000.
An Insolvency Practitioner can serve an Interim Authority Notice on the Local Authority and by doing so he becomes the License Holder during the interim period. An interim authority can only last for two months, during which time an application to transfer the license to a new individual or company must be made.
The Local Authority also grants Personal Licenses to individuals under the 2003 Licensing Act. The holder of the personal license is authorised to sell or supply alcohol for consumption on an off premises where there is a Premises License. However in this case, the personal license remains valid even where the individual holding it becomes insolvent. This is also the case with the appointed Designated Premises Supervisor (DPS). The Premises License has to specify an individual who is the DPS and he/ she has day to day control at the premises and is the point of contact for the Police.
A final word of warning: If you are the freeholder or management company, and your tenant is on the brink of becoming or in fact is insolvent, the loss of licence could have a considerable impact on your interest in the property. In such a case contact us for advice.
Published - October 2010
This article is provided for general information only. Please do not make any decision on the basis of this article alone without taking specific advice from us. stevensdrake will only be responsible for the advice we give which is specific to you.
