Another Pub Co Rip Off for departing Tenants/Lessees (Barrel-Dregs 277)
A year ago we ran an article about a Pub Co tenant who had sold his lease and the Pub Co had failed to refund all his retained monies, for no good reason.
Another tenant has fallen foul of the same “Rip Off” with substantially more money involved.
It would appear that this is standard practice with many Pub Co’s.
The tenant had been with Pub Co for a number of years, ran an excellent pub, yet struggled for the last few years and decided to get out, not a problem.
Knowing little about giving up or selling tenancies they contacted USE at firstname.lastname@example.org for advice on what might be involved.
We pointed out that they needed to contact a Valuer and take legal advice and help on giving up the lease, perfectly normal practice.
Bearing in mind that their financial position was precarious, but safe in the long run when everything was completed, they had a meeting with the Pub Co.
Smooth words, the Pub Co would appoint their Valuer, which the tenant would pay part of the Valuers Fees and the whole transaction would sail smoothly through like silk.
“Lambs to Slaughter”, springs to mind.
The tenant tells their Valuer that he is no longer needed, saving them money, they don’t need a solicitor because the Pub Co have agreed to take the tenancy back and have a new tenant to take over, wonderful!
The tenant receives a letter from the Pub Co saying that all outstanding monies will be paid at 28 days, she can cope with that, 28 days comes and goes, two weeks later still nothing.
A further added note saying that they will only pay when the tenant has deregistered from VAT, if they are both registered for VAT, this is a circular transaction, if the tenant is not registered, then supposedly the Pub Co does not have to add VAT on, saving its cash flow.
At this stage the bank is giving the tenant a hard time and charging 18.4% on their overdraft, VAT is due to be paid and many other bills, they are totally screwed.
The smooth talking Pub Co mouthpiece is unobtainable and when located totally useless, Pub Co policy.
Behind the scenes in the Pub Co, they have installed a new tenant, collected an enhanced figure for Ingoings considerably higher than their Valuers figure to the departing tenant, they have £45K + sitting in their bank, under no obligation to pay regardless of their letter saying payment at 28 days.
The Pub Co’s in their leases and tenancies give 7-14 days credit, or cash with order, they in turn, to be fair should be bound by the same credit agreement, lawyers will claim that this does not apply and they create their own rules for returning tenants funds.
If you buy a freehold or a free of tie lease everything is paid on changeover day, the purchase of the freehold or lease and the Ingoings, Fixtures and Fittings, Stock at Valuation, but you do have to use a solicitor.
The same should apply to a lease/tenancy assignment or changeover, it should be absolutely “Squeaky Clean”, which it is not and we are assured by our sources that the practice is widespread with tied leases and tenancies.
If you are a company that has never carried out this practice we would like to hear from you.
We have lodged a complaint with the Pub Governing Body on this highly questionable activity.
The Government a few years ago, said they were committed to stopping this financial abuse of small business people by large companies. The fines should be draconian, because the practice is widespread by these companies, knowing that the longer that they can keep the money in their accounts is a massive saving on bank charges.
In this case, if they have, say 20 changeovers a week, this could give them up to £900K of other peoples’ money sitting in their account.
We would love to name and shame the Pub Co involved, but until we know the tenant has received all their monies entirely, the sorry tale stops here.
If we want people to make a career for life out of the Industry, we need to clean up all these sharp practices.
Should you need an informed opinion, please email us at email@example.com.
The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.