The End of the Relevant Period – Statutory Demands, Commercial Rent Arrears & Winding Up – September 2021 update
We have previously discussed the Corporate Governance & Insolvency Act 2020 and its impact on being able to present a winding up petition grounded on a failure to satisfy a statutory demand in our blogs here and here.
In short the impact is that creditors have been unable to present a petition based on a statutory demand served between 1 March 2020 and 30 September 2021.
The Insolvency Service has now (9 September 2021) announced significant changes to the emergency regime which include:-
- Creditors will be able to present petitions based on a failure to satisfy a statutory demand served after 1 October 2021; but
- The minimum debt required to found a petition will temporarily be raised from £750 to £10,000; and
- Creditors will, temporarily, have to give debtors 21 days to make payment proposals before proceeding with a petition (it is unclear if this requirement will be pre or post presentation of a petition or whether it replaces or is complementary to the 21 days a debtor has to deal with a statutory demand).
The temporary measures at 2 and 3 above will last until at least 31 March 2022.
Importantly the restriction on presenting a winding up petition grounded on a failure to satisfy a statutory demand, based on a failure to pay commercial rent will continue for now. This is complementary to the restriction on forfeiture and re-entry, for non-payment of commercial rent, under the Coronavirus Act 2020 – also due to continue until at least 31 March 2022.
Although it has been suggested that Covid related arrears will be ring fenced and a mandatory arbitration process imposed, where agreement on those arrears cannot be reached, no legislation has yet been bought forward to give effect to this and so in simple terms there is no arbitration process currently in force.
If you are a commercial landlord and you are owed rent you should act now to obtain payment and/or judgment before any proposed ring-fencing is introduced and the arrears potentially become unrecoverable, or more difficult to recover.