Coronavirus Act 2020 – June Update for Landlords and Tenants
9 June 2021
Debt Recovery & Insolvency
During the Covid-19 pandemic, commercial tenants have benefitted from the major restraints placed on landlords by the government under the Coronavirus Act 2020 and the Corporate Insolvency and Governance Act 2020 (CIGA), in particular the right to seek forfeiture for unpaid rent and pursue rent arrears by way of statutory demands and winding-up petitions.
With many restrictions due to be lifted at the end of June, barring further intervention by the Government, many landlords will be considering the best options for retrieving unpaid rent. On the other hand, many tenants will be concerned at what actions landlords are going to take and the impact of that upon cashflow on businesses that may have just re-opened given that deadline.
Some of the issues that both parties should consider are:
- The Code of Practice issued by the Government which essentially urged landlords to provide concessions where they reasonably could. This included measures such as full or partial rent-free periods, rent variations or waiving interest payments on arrears.
- The option to recover rent arrears via civil action for a judgment and enforcement, which does not involve forfeiture. This may also be relevant in cases where a personal guarantee has been provided.
- The issuing of legal proceedings seeking forfeiture and the enforcement of such orders given that there is a backlog in the court and enforcement systems. With that and the approach adopted by the courts, who may be more sympathetic if Covid-19 was a factor, forfeiture and possession may take considerably longer than normal.
- Consideration the economic climate and how difficult it may be to re-let the property, bearing in mind that if the property is vacant the landlord will be responsible for business rates.
- The various insolvency options open to the tenant. These include, but are not limited to, company or individual voluntary arrangements, voluntary liquidation, and administration.
- Unlike England & Wales, in Northern Ireland the latest Bankruptcy & Companies Masters’ Court Guidance dated 16 April 2021 states that the ongoing restriction in presenting creditors’ bankruptcy or winding-up petitions continues and is unlikely to be removed in the short term.
Landlords or tenants who are unsure what to do once the restrictions are ended, should seek expert advice in order to establish the best course of action. If you or your business is affected by any of these issues or require assistance, please contact our Debt Recovery & Insolvency team to discuss.