Corporate Insolvency and Governance Bill 2020
This article was published on: 29th April 2020Matt Pugh
In response to the unexpected outbreak of Coronavirus, the Government has announced its intention to introduce additional emergency measures to protect commercial tenants.
The new legislation, which will be known as Corporate Insolvency and Governance Bill, aims to provide support against landlords who have been relying on debt recovery actions to intimidate their tenants. It provides additional support to the three months moratorium on evictions detailed in the Coronavirus Act 2020 as it will include a temporary ban on the use of statutory demands and winding up petitions, in cases where the company is unable to pay its debt due to Coronavirus.
Similarly, to the Coronavirus Act 2020, this new legislation will be in force until 30 June with the possibility of extension in line with the moratorium on commercial lease forfeiture
As the Government’s announcement is fairly recent, the exact measures to implement these restrictions are still unclear. However, it seems that statutory demands issued between 1 March 2020 and 30 June 2020 will not legally support a subsequent winding-up petition and all winding-up petitions sent between 27 April 2020 and 30 June 2020, will be reviewed by the court prior to being issued, in order to determine the reason for the company’s inability to pay its debts. It is interesting to note that a shorter ban has been introduced for winding-up petitions.
It is clear that the Government is attempting to support commercial tenants, while acknowledging 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.
In these unprecedented times, landlords and tenants are required to work together with landlords becoming more understanding and high street retailers and other companies have being encouraged to “pay what they can” to their landlords.