Business secretary Alok Sharma announced temporary measures last week to protect retailers against aggressive debt recovery actions during the pandemic.
Statutory demands made between 1 March and 30 June, and winding-up petitions presented between 27 April and 30 June, will be temporarily voided. The measures will be included in the Corporate Insolvency and Governance Bill, which Sharma set out earlier this month.
The government is laying secondary legislation to give tenants longer to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent. A three-month moratorium on evictions is already in place, due to end on 24 June.
City law firm RPC partners welcomed the measures, but called on the government to reassure retailers they would be protected beyond the lockdown.
RPC real estate partner Elizabeth Alibhai said the ban on winding-up petitions was ‘extremely positive news for retailers impacted by coronavirus and closes a loophole where landlords were using insolvency processes to get around the government's previously announced ban on evictions.
‘However, it is vitally important that these protective measures endure long enough for retailers to get back on their feet. To give these businesses a fighting chance of overcoming the many challenges they face, the moratorium should be in place for at least the next 3-6 months.’
The firm also highlighted procedural uncertainty as to how the protection is obtained or enforced. Sharma’s announcement suggested it would be a decision for the courts, but the RPC partners said a court makes its initial consideration of a petition at the first hearing, by which stage the petition has been advertised and many of the adverse consequences have already occurred.
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