This advisory outlines the various options available to landlords after service of a statutory demand on a tenant and the tenant does not pay the debt. It also summarises the general processes, costs, advantages and disadvantages of each option. These options include:
- Present a winding-up petition (where the tenant is a company) or bankruptcy petition (where the tenant is an individual) in Court;
- Issue debt recovery proceedings in the County or High Court;
- Negotiate an alternative arrangement or settlement, such as a payment plan, with the tenant;
- Write off the rent owed by the tenant; or
- Do nothing to maintain ongoing commercial relationship with the tenant.
The expected new Corporate Insolvency and Governance Bill 2020 (the ‘Bill’) will introduce a number of temporary measures to support businesses navigating the challenges presented by trading during COVID-19. These measures include a ban on winding-up petitions (see below), a new statutory moratorium process, a new restructuring plan procedure and invalidating contractual termination clauses in some circumstances where termination is purportedly triggered by the company's entry into insolvency proceedings. Once the Bill comes into effect, landlords may find there are fewer available options and should, therefore, carefully consider any next steps with their legal advisors.
Click here to view a table summarizing the general costs, advantages and disadvantages of each of the various options available to landlords after service of a statutory demand as of 1 June 2020.