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28 Apr 2020

Government to introduce more emergency measures to protect commercial tenants

The Government has announced that they will introduce further temporary measures to protect commercial tenants against debt recovery actions during the Coronavirus pandemic.

This is in addition to the measures already in place under the Coronavirus Act which suspends forfeiture rights and prevents all commercial tenants from being removed from properties until 30 June 2020.

The pending legislation, which will be in the Corporate Insolvency and Governance Bill, will include restrictions on issuing statutory demands and winding-up petitions. Under the new measures, any winding up petition that claims a company is unable to pay its debts must first be reviewed by the court to determine why as it will not be permitted to present petitions where the company’s inability to pay is the result of COVID-19.

The Government announcement sets out that the use of statutory demands made between 1 March and 30 June 2020 and winding up petitions presented from 27 April to 30 June 2020 will be temporary banned where a company is unable to settle its bills due to the Coronavirus pandemic. It is not clear at this stage whether this will only apply to the landlord and tenant relationship or to any company.

The Government has also announced that there will be further legislation to restrict commercial landlords exercising Commercial Rent Arrears Recovery (CRAR) unless there are rent arrears of at least 90 days due.
As with residential property, landlords and investors are being asked to work together with their tenants if their tenants are unable to pay their bills due to the Coronavirus pandemic; although tenants should pay if they can afford to do so or should pay what they can.

There is help available for commercial landlords should they be struggling due to the Coronavirus pandemic through the Coronavirus Business Interruption Loans Scheme.

The announcement sets out that the new measures will be in force until 30 June 2020; however, as with the other temporary legislation, it may be extended further.

Until the new legislation is published, it is not clear exactly what it will cover. We will provide further information once the new legislation is published.