Government announces plans to extend debt protections for commercial tenants.

Government Update

In April 2020, the government introduced measures to protect shops, restaurants, cafes, and takeaways from aggressive rent debt collection by landlords.

The law, which prevents landlords from presenting petitions or winding-up orders, where the lack of payment is a direct result of the tenant’s business having been impacted by covid-19; has now been extended until 31 March 2022.

The government said it plans to introduce a ‘rent arbitration scheme’ to deal with rents accrued over the last 17 months, since the beginning of the pandemic.

Since the start of the pandemic, the hospitality industry has accrued £2.5bn in rent debt, with only 10% of hospitality businesses being able to pay rent in full throughout.

New measures will also be brought in, as a means of preventing smaller companies from entering insolvency and will take effect from 1 October. These will protect businesses from creditors insisting on repayment of small debts by raising the current threshold for a winding-up petition to £10,000 or more.

Creditors will also be required to seek proposals for payment from a debtor business and must give them 21 days to respond before they can begin winding-up action. This measure will also remain in place until March 2022.

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