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Protection From Forfeiture For Commercial Tenants - Extended Again

Protection from Forfeiture for Commercial Tenants Extended Until 31st December 2020

On the 15th September 2020 the Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England/Wales) (No. 2) Regulations were passed extending the protection from forfeiture for non-payment of rent granted to business tenants under the Coronavirus Act 2020 from the 30th September 2020 until 31st December 2020. These Regulations come into force on the 29th September 2020.

Landlords are therefore still prevented from taking any forfeiture action for non-payment of rents or other sums (including service charges and insurance rent) during the period between 26 March 2020 to 31 December 2020.

The Government previously indicated that it was considering a more targeted form of this restriction however it is still the case that there is a blanket prohibition on forfeiture for non payment of rent; tenants or landlords do not need to show that the non -payment of rent is or is not coronavirus related to get within or outside this restriction.  

Commercial Rent Arrears Recovery

The temporary changes to the Commercial Rent Arrears Recovery (CRAR) procedure have again been extended per the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020.  From the 29th September 2020 landlords cannot utilise the CRAR process unless at least 276 days of rent are in arrears. This will increase further, to 366 days of rent in arrears, on 25 December.

The practical effect of these changes are to further protect tenants who do not pay the upcoming September and December quarter rents.

These temporary changes to CRAR will last until 31 December 2020 however it is very likely that this period will be extended again.

Moratorium on the statutory demand/ winding up route

Per the Corporate Insolvency and Governance Act 2020 winding up petitions (made from 27 April 2020 until 30 September 2020) and statutory demands (made from 1 March 2020 until 30 September 2020) were temporarily halted where the company was unable to pay its bills because of the impact of coronavirus.

This moratorium was due to come to an end on the 30th September 2020 however it has now been extended to 31 December 2020 per the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 which came into force on the 29th September 2020. In a nutshell, the extended restrictions provide that:

  • no winding up petition may be presented in reliance on an unsatisfied statutory demand served during the relevant period; and
  • no winding-up petition may be presented by a creditor on the basis that a company is unable to pay its debts, unless
    1) that creditor has reasonable grounds for believing that coronavirus has not had a financial effect on the company, or
    2) that the company’s inability to pay would have arisen even if coronavirus had not had a financial effect on it.

For commercial property advice, please get in touch with Omari Elcock from our Commercial Property team on 01689 887875 or email omari.elcock@cwj.co.uk

 

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Although correct at the time of publication, 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. Please contact us for the latest legal position.