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

In a judgment delivered on 14 October 2020, Mr. Justice McDonald declined to confirm the appointment of an examiner to New Look Retailers (Ireland) Ltd (New Look).

Facts

The realities of a COVID-19-impacted economy have seen more and more businesses closing their doors. For landlords with commercial tenants, that means the possibility of facing multiple tenants going through bankruptcy proceedings as the ongoing and unpredictable effects of the pandemic come to bear.

Introduction

In the wake of the global financial crisis in 2007-08, distressed real estate yielded generous returns to investors that managed to pick the right cherries at the right times.

'Chapter 11 bankruptcy', the US insolvency regime, often features in the UK headlines. When Lehman Brothers filed under Chapter 11 in 2008, it marked the start of the global financial crisis. Chapter 11 (which refers to part of the US Bankruptcy Code) is a restructuring tool designed to rescue companies. Its closest UK counterpart is Administration, under Schedule B1 to the Insolvency Act 1986.

The Corporate Insolvency and Governance Act 2020 was passed on 25 June 2020. The legislation has been in contemplation for a number of years, and has implemented a significant reform to the UK's restructuring and insolvency framework. It has also implemented certain temporary measures that are designed to protect and support businesses, protect jobs and, in doing so, attempt to preserve the economy during the COVID-19 pandemic.

What have we been up to?

The days and nights may well be getting noticeably cooler, but as a team we remain very much at simmer point in terms of the demands of newlyacquired business support and insolvency work and staying on top of recent legislative changes.

Amongst this month's work highlights have been:

The Corporate Insolvency and Governance Act received Royal Assent on 25 June 2020. It implements the measures announced by the UK government on 23 April 2020 to safeguard against aggressive rent collection tactics. It follows the ban on forfeiture for non-payment of rent contained in the Coronavirus Act 2020 which came into effect on 25 March 2020. In this article, DLA Piper’s experienced Real Estate and Restructuring lawyers assess the debt collection restrictions contained in both Acts.

This is the first part of a two-part series

Commercial tenant bankruptcies and COVID-19

Let’s say you’re a hemp/CBD business (that also services the cannabis industry in a limited capacity) and COVID-19 has hit you. Hard. You’ve stretched your resources as far as you can, but you’re still on the ropes financially.