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Further Protections for the Commercial Sector

The temporary restrictions on winding-up petitions following service of an unpaid statutory demand, (amongst other restrictions), brought in under the Corporate Insolvency and Governance Act 2020 (“CIGA”) in April 2020 and have now been extended until 30 September 2021.

The restrictions initially related to a period between 1 March 2020 and 30 September 2020. However, there have been a number of extensions to the expiry of the relevant period, as defined within CIGA, that have been announced by the government throughout the pandemic. The latest extension is now not due to expire until 30 September 2021 – although further extensions to this deadline have not been ruled out past this date.

The latest extension came into force on 22 June 2021 and extends certain temporary protections, particularly for commercial tenants in light of the continuing difficulties arising from the Covid-19 Pandemic.

These protections follows the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2021 which came into force on 25 March 2021 and increases the minimum amount of net unpaid rent that must be outstanding before the landlord can exercise rights of commercial rent arrears recovery (‘CRAR’) against tenants.

There are also express protections for business tenants that limit the landlord’s ability to forfeit the lease before 30 June 2021 due to non-payment of rent. Although no news have been provided to date, it will be likely that this date will also expected to be extended in line with these provisions.

As can be seen from the above, the recent changes form part of the wider proposals announced by the government on 16 June 2021 to protect those businesses that have had to remain closed during the pandemic and are unable to pay rent on commercial property. In addition, these latest restrictions will protect companies from creditor enforcement action where their debts relate to the pandemic and to ensure that their directors, who continue to feel the effects of the restrictions have an opportunity to continuing trading.

Most landlords and tenants who are affected by the Covid-19 pandemic will already have had discussions dealing with arrears. These further protections will hopefully allow further discussions between parties which can only be good news for landlords and tenants alike.

Whether you are a business, landlord or tenant and need advice, or if you have questions about any other commercial property issues, please contact Alex Jeffery on 01752 388934 or