What new measures have been introduced by the UK government to provide further support to commercial tenants struggling to pay rent?

For the past several months, businesses across the country have grappled with the question of whether the pandemic and local “stay at home” or “shelter in place” orders aimed at curbing the spread of COVID-19 trigger force majeure clauses in their leases and other contracts. In one of the first cases to consider this question, the U.S. Bankruptcy Court for the Northern District of Illinois held in In re Hitz Restaurant Group that a restaurant tenant was entitled to a rent reduction under its force majeure clause due to Illinois Gov. J.B.

The decision of Mr Justice Morgan in A Company (Injunction To Restrain Presentation of Petition) [2020] EWHC 1406 (Ch) (judgment anonymised) which was handed down on 2 June 2020 will be of interest to tenants and landlords alike in the current climate. The judgment, which follows the decision in Travelodge Ltd v Prime Aesthetics Ltd [2020] EWHC 1217 (Ch) will be of huge precedent value to commercial tenants that have been impacted by coronavirus and have been unable to meet their rent obligations as a result.

On 20 May 2020, the Corporate Insolvency and Governance Bill (the “Bill”) was introduced to the UK Parliament. The Bill is expected to be fast-tracked through Parliament and be enacted as early as June 2020.

The Bill deals with both temporary measures in response to the immediate effects of the COVID-19 pandemic, and major reforms to the insolvency regime. It represents one of the most debtor-friendly developments in recent times.

Questions from a landlord's perspective

My Tenant has asked for a rent holiday. I want to help them out at this time - how can I facilitate this?

Most landlords and tenants are working well together to reach agreement in respect of rent, either moving rental payments to monthly rather than quarterly in advance, or deferring rental obligations for a specified period. It is obviously preferable, but not necessarily essential, to have such arrangements documented in writing, as follows:

Long awaited insolvency reforms in the UK, plus the government’s COVID-19 proposals on the use of statutory demands – and much more

What’s the latest?

In a small victory for landlords of bankrupt tenants, the Bankruptcy Court for the Southern District of Texas has ruled that the Chuck E. Cheese parent company may not use its bankruptcy filing to avoid paying its rent.

In a not unexpected move with restrictions on the general public expected to remain well into the New Year the Government has extended the protections for commercial tenants and the restrictions on filing statutory demands and winding up petitions for COVID-19 related debts until the end of March 2021. The Government's announcement referred to these being the "final extensions".

The UK Government has announced that the temporary prohibition on forfeiture will be extended when the current prohibition comes to an end at the end of the year. The restriction, that prevents commercial landlords from forfeiting a lease for non-payment, will now be in place until 31 March 2021.

As England enters its second period of lockdown, commercial landlords are reminded that the temporary measures put in place by the UK Government earlier this year, protecting commercial tenants from eviction and the operation of CRAR and restrictions on the use of certain insolvency processes, are set to continue during the second lockdown and beyond.

The measures are intended to protect business tenants that are unable to pay their rent as a result of the COVID-19 pandemic.

The key measures