24 aPRIL 2020
Coronavirus: Effect on Landlord & Tenant
by Gary Scott
Following the implementation of measures to protect commercial tenants from eviction by way of forfeiture during this Coronavirus "lockdown" (see here) it seems that many commercial landlords have taken other steps to enforce the rent payments, such as implementing the Commercial Rent Arrears Recovery ("CRAR") process, issuing money claims in Court and, quite often, issuing a Statutory Demand with a view to pursuing the Tenant via a Winding Up Petition.
Government has now announced that it is going to try to put a stop to this "unfair practice" by "temporarily" voiding or banning statutory demands and winding up petitions "where a company cannot pay their bills due to Coronavirus". There is a suggestion that Judges will triage petitions before they are issued to ensure that the proposed rules are followed. Yet to see how that works in circumstances where the Debtor will not have had the opportunity to make representations to the Court at that stage and also what factors might distinguish between debt which has arisen as a result of Covid-19 and other debt, where presumably the petition may be issued and prosecuted without being "void".
I should note here that Landlords will take serious objection to the suggestion in the announcement that attempting to recover monies which are due to them in a lawful manner constitutes an "unfair practice".
The Government have also announced that they are bringing in restrictions on the use of CRAR, limiting it to "90 days of unpaid rent".
The devil will be in the detail on what circumstances will lead to a petition being declared void or indeed that it may proceed and in whose favour such measures are introduced. No mention in the press release about sole traders or partnerships, but it is certainly possible that it will extend to such businesses.
Will the legislation apply to statutory demands served or indeed petitions issued, before the legislation comes into force? No specifics, but the language of the press release certainly suggests it will.
The link to the announcement is here
The decision to apply a blanket stay to all possession actions by way of a new Practice Direction (PD51Z) is being challenged as being unlawful and guidance sought as to whether all case management directions are stayed and whether the stay can be lifted for individual cases. A summary by Nearly Legal and a link to the first instance decision can be found here.