Insolvency News Bulletin - June 2022

In this bulletin, we focus on the Commercial Rent (Coronavirus) Act 2022 (the Act). Karolina Lewandowska considers the scope and extent of the Act and explains the impact of the moratorium; Tara Searle explains how to utilise the arbitration scheme introduced by the Act and the process; and Nazash Asif considers the impact of the rent arbitration scheme and moratorium on landlords. Separately, Cathryn Butler provides a reminder on the return of pre-pandemic winding up petitions and statutory demands, an update on director disqualifications and the rise of claims against directors for misuse of bounce back loans and shares a recent case study following our latest pricing initiative on discrete instructions for office holders.

The Commercial Rent (Coronavirus) Act 2022 - the scope and extent explained

The Commercial Rent (Coronavirus) Act 2022 received Royal Assent and came into force on 24 March 2022. The aim of the Act is to provide a legally binding arbitration process to resolve disputes in relation to commercial rent arrears accrued during the COVID-19 pandemic when businesses were forced to close.

Find out which tenancies the Act applies to and the rents captured here.

The Commercial Rent (Coronavirus) Act 2022 – utilising the scheme

The Commercial Rent (Coronavirus) Act 2022 introduced a binding arbitration process (the Scheme) to reconcile rent disagreements between landlords and tenants where a business tenancy was adversely affected by closure during coronavirus. In this article, we highlight how the Scheme applies and its process.

Read more about the process here.

The Commercial Rent (Coronavirus) Act 2022 - the impact on landlords

Under the Commercial Rents (Coronavirus) Act 2022, a rent arbitration scheme has been introduced with a temporary moratorium in place until 23 September 2022.

The government has produced a ‘commercial rent code of practice’ (the Code) which provides practical guidance in respect of:

  1. Things to consider when negotiating an agreement over rent arrears;
  2. Eligibility criteria under the Act;
  3. How the rent arbitration scheme works; and
  4. When the protected period started and ended for different businesses.

The guidance encourages parties to settle rent arrears disputes and make allowances where possible. If a party refuses to negotiate or an agreement is cannot be reached, either party can make a referral under the rent arbitration scheme.

Discover the impacts on landlords here.


Return of pre-pandemic Winding Up Petitions

During the pandemic, the Government imposed restrictions on the use of statutory demands and winding up petitions. Whilst these restrictions were eased from 1 October 2021, some temporary restrictions did still remain until 31 March 2022, including an increased threshold for presenting winding up petitions of £10,000.

As of 1 April 2022 these temporary restrictions have ended and statutory demands and winding up petition requirements have returned to the pre-pandemic state. However, restrictions on winding up petitions and bankruptcy petitions remain affected where they relate to protected rent arrears under the Commercial Rent (Coronavirus) Act 2022.

Director disqualifications and claims in respect of Bounce Back Loans continue to rise

The number of directors disqualified for the misuse of the Government bounce back loans continues to rise, as does the length of the disqualification period - it is not uncommon for directors to be receiving 12 to 15 year disqualification periods. The number of civil claims against directors in respect of the misuse of bounce back loans is also on the rise. We have recently obtained successful settlements in respect of these types of claims without the need to issue proceedings.

We offer cost effective fee structures for pursuing directors in respect of misuse of government support in addition to fixed and competitive pricing for office holders (such as remuneration applications, block transfer orders, possession and sale applications) and for other stakeholders such as directors, debtors and creditors (such as winding up petitions, strike off applications, company restorations and bankruptcy annulments).

For more information on this bulletin, please contact our Restructuring & Insolvency team.

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