Winding-up petitions banned for commercial tenants – COVID-19 update

24 April, 2020

 

 

The Government yesterday announced further temporary measures to help protect commercial tenants against aggressive debt recovery actions from landlords during the COVID-19 pandemic.  This builds on the protection already introduced last month, which placed a moratorium on evictions for commercial tenants for at least a 3-month period.

 

Under the new measures, statutory demands and winding up petitions issued to commercial tenants will be temporarily voided where the company’s inability to pay is the result of COVD-19.  The new legislation, which will be included in the Corporate Insolvency and Governance Bill set out earlier this month by the Business Secretary, Alok Sharma, will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture.

 

Secondary legislation is also being introduced to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

 

The Business Secretary, Alok Sharma, urged tenants to pay what they can and asked landlords and investors to work collaboratively with businesses unable to pay their bills during the COVID-19 pandemic.  He pointed commercial landlords to the recently expanded Coronavirus Business Interruption Loans Scheme (CBILS) to provide them with support and said: “I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the COVID-19 emergency continues.”

 

As with many of the temporary measures introduced by the government to help protect businesses from the potentially disastrous impact of COVID-19, how the rules will actually work in practice is not yet clear.  We will provide further updates on this when they are available, but in the meantime if you are concerned about how this may affect your business please contact Joanna Ford at joanna.ford@crippspg.co.uk.

 

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