Corporate Insolvency and Governance Act 2020 Update: Landlords and Tenants

The Corporate Insolvency and Governance Act (“CIGA”) came into force on 26 June 2020 introducing a number of reforms aimed at providing protection to tenants in financial distress, particularly as a result of the COVID-19 pandemic. Notwithstanding the fact that the reforms present a number of potential problems to landlords, it should help to enhance rescue opportunities for financially distressed tenants.

Landlord and tenants should not delay in seeking legal advice in relation to their tenancy agreements, especially in light of the changes brought by Corporate Insolvency and Governance Act.

We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inn of Court adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency in particular issues. Our team have unparalleled experience in dealing with supplier contracts and disputes, serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions.

From 30 September 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 (“the Regulation”) is in force. We note that the purpose of the Regulation is to extend certain of the temporary measures introduced by CIGA 2020 to assist tenants and companies who are struggling to deal with the economic ramifications of COVID-19.

What are the restrictions on commercial landlords?

The government has announced that the restrictions on commercial landlords in presenting a winding-up petition against tenants who have not paid rent are to be extended to the end of 2020. The announcement follows confirmation last week that it has extended its moratorium preventing the eviction of commercial tenants for non-payment of rent until the end of 2020.

What is forfeiture?

Prior to CIGA 2020, landlords could re-enter the premises without notice to the tenants and take possession of the premises if the tenant failed to make payment of the rent due. Landlords could effectively end the lease and change the locks without any court action. It should be noted that relief could be obtained from the Court by the tenants in these instances if the rental arrears and landlord’s fees are paid by the tenant.

Section 82 Coronavirus Act 2020 now prevents any forfeiture between 26 March and 31 December 2020 ban on forfeiture proceedings in light of the COVID-19 pandemic.

What about Commercial Rent Arrears Recovery?

Commercial Rent Arrears Recovery (CRAR) previously allowed Landlords to instruct enforcement agents to take control of the tenant’s goods and possessions and sell the these goods in order to obtain an equivalent value to any rent arrears.

What are the restrictions on CRAR?

The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 prevented landlords from using CRAR unless an amount of at least 90 days’ rent was due.

CRAR cannot be used unless the tenant has rent arrears of at least:

  • 189 days’ rent on or after 24 June 2020 (but before 29 September 2020);
  • 276 days’ rent from 29 September (but before 25 December 2020); and
  • 366 days’ rent from 25 December.

This restriction also now applies until 31 December 2020 or such later date as may be specified in regulations.

Do I have any other legal options available?

Yes. Creditors are still able to issue a debt claim via the County Court Money Claims Centre or Money Claims Online. These services usually process a claim within 17 working days.

Once the claim has been issued and served on the debtor, they have 14 days in which to acknowledge the claim or file a defence, which can be extended by a further 14 days (making it 28 days from the date of service) with an acknowledgement of service.

Do I need to follow the pre-action protocol?

The pre-action protocol does not apply to business to business debts (unless the person who owes money is a sole trader).

You- the creditor- must be a “business” claiming payment of a debt from an individual. “Business” is not defined in the Debt Protocol, therefore a creditor must be advised whether they are considered a business or not- guidance on this point is elaborated upon in Financial Services Authority v Anderson [2010] EWHC 599 (Ch).

What is the debt recovery pre-action protocol?

The pre-action protocol is in essence a rule book that a creditor must follow before a creditor commences debt recovery court action.

The overriding objective in the Civil Procedural Rules (CPR) states that wherever possible, parties in a dispute should endeavour to avoid court proceedings.

Are there sanctions for not complying with the pre-action protocol?

If you as a creditor business is owed money by an individual debtor (for example for unpaid fees), it is recommended that you seek legal advice from specialist debt recovery solicitors. Legal advice is recommended given that failure to follow the specific pre-action steps could lead to the court imposing sanctions on the non-compliant party.

Letter of Claim

We are specialist litigation lawyers who can advise you on each stage of your claim. Before court proceedings are commenced, a creditor should consider sending a Letter of Claim to the debtor.

The Letter of Claim should contained the following information:

  • the amount of the debt;
  • whether interest or other charges are continuing;
  • where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed;
  • where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor;
  • where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom;
  • if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered;
  • details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options;
  • the address to which the completed Reply Form should be sent;
  • enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added;
  • enclose the most recent statement of account for the debt and state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date;
  • where no statements have been provided for the debt, state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred;
  • enclose a copy of the Information Sheet and the Reply Form at Annex 1 to the Pre-action Protocol for Debt Claims; and
  • enclose a Financial Statement form (an example Financial Statement is provided in Annex 2 to the Pre-action Protocol for Debt Claims – the Statement is part of the Standard Financial Statement and can be downloaded from

Specialist London Debt Recovery Lawyers

We’re masters of insolvency dispute litigation. We are a specialist City of London law firm made up of Solicitors & Barristers. We’re based in the Middle Temple Inns of Court (next to the Royal Courts of Justice where the High Court and Central London County Courts are based).  We’re experts in dealing with matters surrounding insolvency in particular our team have unparalleled experience at both issuing and defending winding up petitions vigorously at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. We provide a quick no cost initial telephone case review to establish whether or not we can help you; just call one of our team on 02071830529.

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