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Rent arrears and debt recovery options available in the current climate

It is thought that less than 20% of commercial rent has been paid on time during the Covid 19 pandemic. Moratoriums imposed by the Government pursuant to the Coronavirus Act 2020 and the Corporate Insolvency and Governance Act 2020 in order to protect businesses and residential tenants have in large part effectively curtailed various enforcement mechanisms such as the use of forfeiture, Commercial Rent Arrears Recovery (CRAR), statutory demands and winding up petitions. Statutory demands can be served but there are difficult obstacles to obtaining winding up orders.

Commercial tenants/debtors have tried to avail of the Code of Practice for Commercial Property Relationships ( published on the 19th June 20 and updated on the 6th April 21) in order to try to persuade landlords/creditors to agree to restructured payment arrangements or to obtain extended payment periods whereas landlords/creditors are quick to remind tenants/debtors that the code is voluntary and of no legal standing. Whatever the Government has tried to do, debts do not disappear and the code does not prevent Judgements being obtained.

The county court claim process to obtain a judgement debt remains a very effective way to pursue debt as it can give rise to a series of enforcement options including charging orders secured on the debtor’s property which may have to be sold. This procedure can be used alongside a claim for a possession order based on residential rent or bridging loan mortgage arrears.

The Pre-Action Protocol for Debt Claims ( PAP ) must be adhered to. It came into force on the 1st October 2017 and applies to any business (including sole traders and public bodies) who are claiming debt from an individual which includes a sole trader.

A number of Government restrictions are soon to be lifted shortly. The moratorium on residential evictions expires on the 31st May 2021 as does the prohibition on Enforcement Agents being permitted to enter residential properties.

The litigation team at Linder Myers can provide you with high-quality expert advice in relation to both pursuing and defending claims on a wide range of matters, with fixed fee options available in most situations. Get in touch today to discuss your situation.

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