Don’t wind me up! – Corporate insolvency and governance bill 2019-21 published

Don’t wind me up! – Corporate insolvency and governance bill 2019-21 published

Mark Banham, Associate in the property litigation team provides an update on the new Corporate Insolvency and Governance Bill 2019-21 which has provided clarification to landlords and tenants alike on the measures originally designed to protect businesses on the high street from landlords seeking to recover rent using “aggressive tactics”.

In my previous article below I explained that on 23 April 2020, the Government delivered a press release detailing new measures that it intended to introduce to protect commercial tenants on the UK’s high street (“the Measures”). Whilst the Government’s message was clear that landlords and tenants should work collaboratively to come to an agreement as to the rent owed during the pandemic, until the Bill was published the wording of Measures remained non-binding guidance and were open to interpretation. In the intervening weeks the wording and extent of the Measures have been the subject of much debate between landlords and tenants and their legal advisers, and have been considered in Mr Justice Snowden’s judgment in the case of Re: Saint Benedict’s Land Trust Ltd, also known as Harper v Camden [2020] EWHC 1001 (Ch) (27 April 2020) (paragraphs 70 to 86).

The Government has explained that the purpose of the Bill is to “relieve the burden on businesses during the coronavirus (COVID-19) outbreak and allow them to focus all their efforts on continuing to operate”. Its publication has now put many of the ambiguities to rest. The Bill clarifies that:

  • Winding up petitions based on statutory demands served between 1 March to 30 June 2020 (the “Relevant Period”) are prohibited from being presented at Court.
  • If any winding up petitions are filed during the relevant period it will have to be established that “coronavirus has not had a financial effect on the company” or the facts upon which the petition is based would have arisen even if coronavirus had not had a financial effect on the company.
  • The prohibitions and restrictions contained within the Bill will apply to all companies and will not be limited to commercial tenants on the UK high street as the Measures initially suggested.

The Bill (likely to become law shortly) has not fully closed the door on a landlord seeking to present a winding up petition for unpaid rent but the conditions to be satisfied in order to achieve this goal has made the process potentially very difficult for a landlord. Landlords may well feel that the Bill goes too far and that their commercial interests are largely being ignored by the Government during the course of the pandemic.