Insolvency Update 22 June 2020
On the 19th June the UK government announced an extension of the measures it introduced in March to prevent high street businesses facing eviction over the summer.
The new voluntary Code of Practice for the commercial property sector has been developed to support businesses with regards to the financial obligations under their commercial leases and protect them from aggressive rent collection by encouraging tenants and landlords to be transparent in discussions and to act reasonably and responsibly during this challenging time for businesses.
The main changes include:
- Amending Section 82 of Coronavirus Act to extend the time period for suspension of the forfeiture of evictions from June 30 to September 30, giving tenants an additional period of grace should they miss a rent payment within the next 3 months
- The introduction of secondary legislation to stop landlords from using Commercial Rent Arrears Recovery unless they are owed 189 days of unpaid rent, up to the 30th of September
- The government are also seeking an amendment to the Corporate Insolvency and Governance Bill to extend the temporary ban on the use of statutory demands and winding-up petitions where a company cannot pay its bills due to the impact of Coronavirus, until 30 September 2020.
At the time of writing, no announcement has been made relating to an extension of the suspension of the wrongful trading provisions which was announced at the same time as these tenant protection measures and covered periods 1 March to 1 June 2020. We are also awaiting further information about the fast-track of proposed changes to the Insolvency Act, including a moratorium for companies in financial distress, a change to the use of termination clauses in supply contracts, new restructuring plans, and the temporary prohibition on the presentation of winding up petitions. We are monitoring Government announcements closely and will keep you updated.