Sunday, September 25, 2011

From Licensees Supporting Licensees

Kerry Davis

Just read Mark's post about PPP and thought I would share with you a business model that I was told about when we were desparately trying to sell the pub before we had to leave. Not sure I like it as it prays on Licensees that are going out of business, however they seemed to make a lot of money which is ok if you don't mind looking over your shoulder all the time and can ignore the fact that you are taking advantage of someone elses downfall! - This company (loosely speaking) have contacts with all the pubcos and they find out what pubs are likely to come up in the near future. They then wait until the licensee leaves, goes bankrupt or is forced out. They then negoiate a TAW with the Pubco with a small deposit of anything from 2K to 5k and low and behold they have a pub for next to nothing. They keep the Pubco sweet by paying the rent, however, they apparently know how to bypass Brulines, so only buy small amounts off the Pubco (who won't think anything of it if the pub was struggling before) they pay their staff and start off by paying suppliers, but that apparently is it, they don't pay rates, gas or electric, nor any of the other little things that mount up - they only pay the basics (they reckon they can get away with all this for about 3-4 months sometimes). They sometimes pay if they want to stay in the pub longer!! When things start to come on top - they give in a months notice to the pubco and leave. They set up Limited companies with guarantors (who have nothing and are paid for it) Their actual names are on nothing, so it can't be traced back to them. When the guarantors are chased, nothing can be done there either. They basically get the take each week, minus staff, rent and supplies. They were both driving brand new BMW's and had a total of 6 pubs on this basis and still looking for more. They were looking at buying their first lease when they came to see us, but clearly changed their minds! Interesting but not a particularly ethical concept!

J Mark Dodds

At one stage last year S&NPC had 50 pubs in the south east on TAW to one such Holding Company as Kerry describes above. The Holding Co never paid utilities and when the electricity was shut off at any site (i.e. the meter is removed by the supplier) they just hired a diesel generator and bypassed the system altogether. Overheard in conversation with S&NPC employee "We don't know what to do - we've got so many tenants in forfeiture we NEED these Holding Companies and this lot have 25 of our pubs with generators in the garden". Black Market Racketeers mateys. When you make a pact with the Devil you get a pact with the Devil.

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