The Commercial Rent (Coronavirus) Act 2022 provided tenants in the retail and leisure sectors who had subsisting rent arrears incurred between March 2020 and August 2021 with immunity against enforcement action from landlords. However, that immunity was only for a period of 6 months from March 2022. During that window, either landlord or tenant were able to refer the matter to arbitration if they did not come to a commercial settlement.

The final date for arbitration referrals was 23 September 2022.

As challenging trading conditions in the UK economy persist, insolvency is a real prospect facing many companies. Businesses are increasingly likely to find themselves dealing with other businesses that are in financial difficulties or even insolvent. In such cases, the need to plan ahead, develop strategies to minimise problems and manage relationships with customers and suppliers should not be underestimated.

This article looks at some of the issues to consider when dealing with companies that are either insolvent or on the brink of insolvency and how to protect your business.

The UK Government recently responded to The House of Commons Transport Committee’s Report, titled “UK aviation: reform for take-off”. The Report makes a number of recommendations to address ongoing problems facing the UK aviation sector as it moves towards post-pandemic recovery. Alongside other issues, it raises the idea of reform to the airline insolvency procedure and passenger protections to be addressed by way of an Airline Insolvency Bill.

With the Commercial Rent (Coronavirus) Bill having received Royal Assent, Penningtons Manches Cooper’s real estate litigation team sets out below an overview of the restrictions now coming into force.

There are restrictions on the service of statutory demands and winding-up petitions where a debtor company is unable to pay sums claimed due to coronavirus, which are due to expire on 31 March 2022.

With the Commercial Rent (Coronavirus) Bill (the Bill) now in its final stages, Penningtons Manches Cooper’s real estate litigation team sets out below an overview of the new restrictions that will come into force when the Bill is given Royal Assent.

Current restrictions

It may first be beneficial to review the current moratorium that is in place. The majority of these restrictions expire on 25 March 2022 and the insolvency restrictions expire on 31 March 2022 but, until those dates, the following apply:

• Commercial rent arrears continue to accumulate as a result of the pandemic, such that arrears are estimated to reach £9 billion by March 2022 and comprise a much larger slice of the typical debt stack than they did pre-pandemic.
• The UK government has proposed a binding arbitration scheme to help resolve the arrears and further extend the existing protections from enforcement and insolvency procedures that

End of CIGA restrictions

On 1 October 2021 the temporary changes to corporate insolvency law, brought about by the Corporate Insolvency and Governance Act 2020 (CIGA) and which seriously curtailed creditors’ ability to present winding-up petitions between 1 March 2020 and 30 September 2021, changed.

• Brexit ripped up the rules on automatic cross-border recognition of formal insolvency proceedings and restructuring tools between the UK and the EU.
• Recognition will now depend on a patchwork of domestic legislation, private international law and treaties and may lead to different outcomes depending on the jurisdiction.
• Cross-border recognition is still achievable but involves careful navigation and a more tailored approach in individual cases to selection of the most effective process and its route to recognition.

Legal landscape

It’s autumn and time to put that box-set viewing on pause and perhaps instead review the likely direction of travel of the “zombie” army of distressed businesses. How do you avoid contagion?

Unless you hibernated during the various lockdowns you will not have failed to notice that the impact of Brexit, the Covid-19 pandemic, and lockdown measures took their toll on spending, incomes and jobs, tipping the UK economy into recession after negative growth in the first two quarters of 2020.

The coronavirus pandemic posed a significant challenge to the financial health of businesses across the UK. A sector additionally at the mercy of the markets following the easing of lockdown restrictions is the energy industry, with the wholesale price of natural gas (measured on a pence per therm basis) having risen dramatically from around 50p/therm in January 2021 to over 200p/therm during the first few weeks of October 2021.