Coronavirus Blog Series: Corporate Insolvency & Governance Bill 2020

Published 14 May 2020

In these unprecedented times it is hoped that landlords and tenants will work together in respect of rental payments and in support of this the UK Government passed into law the Coronavirus Act on 25 March 2020 providing additional powers to deal with the Coronavirus outbreak including measures to suspend new evictions from private rented accommodation while the national crisis is taking place.

Under the Coronavirus Act, landlords will not be able to start proceedings to evict tenants for at least a three-month period. However, since then it seems that many landlords have been issuing insolvency proceedings such as statutory demands and winding up petitions thereby circumventing the spirit of the Act.

In an effort to prevent Landlords from bypassing the intended effect of the forfeiture provisions set out by the Coronavirus Act by issuing Insolvency Proceedings, the Government have proposed a temporary ban on the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. The measures will be introduced when the Corporate Insolvency and Governance Bill 2020 is enacted in to law, with a goal to ensuring commercial tenants suffering from financial hardship are not put under undue pressure by Landlords utilising untimely debt recovery measures.

The Bill will aim to provide additional support to the three months moratorium on evictions detailed in the Coronavirus Act 2020.

Whilst the Government is attempting to support commercial tenants, it does however acknowledge the impact that the pandemic will have on landlords, who will also be prevented from using their commercial rent arrears recovery unless they are owed 90 days of unpaid rent.

The Corporate Insolvency and Governance Bill is expected to be expedited through Westminster but it remains to be seen whether Northern Ireland will follow suit. With the Insolvency Service in Northern Ireland stating that their intention is to keep Insolvency legislation in Northern Ireland consistent with our English counterparts during the COVID crisis, it is likely that we will soon see the introduction of a temporary ban on statutory demands until the 30th June, with the possibility of an extension in line with the moratorium on commercial lease forfeiture.

If you or your business is affected by any of these issues please contact the Insolvency team at MKB Law.

This article is for general guidance only and should not be regarded as a substitute for professional legal advice.

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