Commercial Eviction & Winding-Up Order Advice

In Bar Business, Covid-19

Not everyone is lucky enough to have an understanding commercial landlord.

We are hearing from many bars across the country who are having trouble with their landlords despite advice from the government for leniency during the coronavirus times. Whilst, in the short-term, evictions have been legally stopped there are other avenues that certain landlords have been taking.

Where Do I Stand?

Currently the government ban on evictions covers missed payments from the start of the UK coronavirus pandemic (the announcement was made on March 18th) until June 30th. It is widely expected that this end date will be extended as the isolation measures stay in place and venues are unable to reopen.

So you can’t be evicted from your premises but what other options does your landlord have?

Winding-Up Orders

This is, by far, the most common course of action landlords are threatening from the conversations we have had with people. Legally there is nothing to stop them doing this, but the reality is very different.

The other options open to landlords are serving a Statutory Demand (a written demand for payment if the arrears are over £750) or suing for rent arrears. Winding-up orders seem to be by far the most prevalent, but all three options have the same issue in the current climate.

The reality is that any of these will be very long, slow processes at the moment. This is simply because the courts are running with reduced staff and are focusing on cases that look at loss of liberty and vulnerable people.

On March 25th Insolvency and Companies Court Judge Mullen adjourned all 306 current petition hearings, in batches to dates 12 – 19 weeks in the future. With that in mind it is obvious that any new winding-up orders are not going to be heard for a long time.

If a landlord does go through with this still and makes their tenant insolvent, the lease will usually be disclaimed, and the landlord will usually be among all of the other unsecured creditors with no guarantee of recovering any rent. On top of this they will be left with no tenant in a market that will, undoubtably, take a long time to recover once the current restrictions are lifted.

As such winding-up orders being issued currently are basically a threat with no real teeth in the short-term and a ridiculous example of nose biting and face spiting in the long-term.

As with all of these things it is best to talk to your landlord if they are threatening any sort of action and trying to come up with a sensible solution either with rent deferral, reduction or the use of your rent deposit to cover any sort term issues. Of course, once this period of leniency from the government is up the outstanding rent will be owed but, as previously stated, the market for finding new tenants will be very tough so it is worth starting discussions as soon as possible to try to find a plan which works for both parties.

As always if the talking method doesn’t work contact your lawyer, but hopefully this information will help some sleep better tonight.

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