Statutory demands temporarily voided for commercial tenants
s.ritchie • April 27, 2020
Having already put a moratorium on forfeiture of business leases for non-payment of rent, the Government announced on 23 April 2020 that statutory demands and winding-up petitions issued to commercial tenants are to be “temporarily voided”; and changes are to be made to CRAR to protect commercial tenants further in the current emergency.
As for winding-up petitions based on inability to pay debts, the presentation of a petition and the making of a winding-up order will be barred where the company’s inability to pay results from Covid-19.
Also, CRAR will be banned unless 90+ days’ rent is unpaid. The effectiveness of CRAR as a debt recovery tool is immediately questioned.
It doesn’t prevent the landlord from issuing debt recovery proceedings or the parties agreeing to surrender the leases, but time will tell if either of those options occur in reality.
Full details will be in the Corporate Insolvency and Governance Bill and new secondary legislation.
Although the measures are designed to prevent “aggressive rent collection”, the question is whether it is a fair and balanced decision for both the landlord and the tenant.
The relief is however temporary and will expire on 30 June 2020 (unless extended).
If you wish to speak to Simone Ritchie about the issues that this raises or non payment of rent by your tenant generally, then before taking any action please feel free to email: s.ritchie@woodstockpropertylaw.com or call: 0330 055 2785 and Simone will guide you through the options available.
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