More protection for commercial tenants

Further to our recent article on the effect of the Coronavirus Act 2020 on leases, yet more changes are on the horizon. These will be welcomed by our clients who are commercial tenants but will also frustrate our landlord clients who have fewer and fewer options open to them when faced with a tenant who has defaulted on their rent.

The  government has recently announced further emergency measures to protect commercial tenants from aggressive enforcement action.

On 23 April 2020, the government announced that it will introduce further emergency measures to protect commercial tenants from winding-up proceedings and other enforcement action by landlords, in addition to those already introduced by the Coronavirus Act 2020.

This new  pending legislation will include restrictions on the issuance of statutory demands, the presentation of winding-up petitions and the making of winding-up orders if the debtor company is only unable to pay its debts because of the outbreak of COVID-19.

The devil will be in the detail and we have yet to see the draft legislation.  However, it appears that a winding up petition will not be possible further to the service of  statutory demand  issued between 1 March 2020 and 30 June 2020. Further, all winding-up petitions presented at the court between 27 April 2020 and 30 June 2020 that are based on a company's inability to pay its debts will be reviewed by the court before being issued.

The government has  also announced that it will introduce secondary legislation to prevent commercial landlords exercising commercial rent arrears recovery (CRAR) against tenants unless rent arrears of at least 90 days are due to the landlord.

There are interesting questions that arise, for example, if you can show  that non-payment is not caused by the pandemic, can you still proceed with enforcement action. As soon as we have further information we will update you.

For further advice on this issue, please contact Alan Dixon or Michael Adamson

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.