Posted by Vicky Hernandez, Partner
Retail landlords gearing up to issue statutory rent demands, says law firm Royds Withy King
Retail landlords are reportedly ignoring government guidelines to protect retailers who cannot pay their rent by gearing up to issue statutory demands for rent arrears, says law firm Royds Withy King.
“Many of our retail clients with outlets in some of the largest shopping centres in the UK tell us that their landlords are gearing up to issue statutory demands for rental arrears. A statutory demand will leave our clients just 21 days to pay, or contest, those rent demands or face insolvency action.
“Even if landlords do not start formal insolvency action, failure to comply with a statutory demand could mean that a retailer is technically insolvent which will then impact on its banking covenants.
“We understand that landlords too feel the financial pressures of COVID-19 and, to date, have presented a united front with their tenants. However, whilst government action has restricted the ability for landlords to evict tenants and there is potential reform of the insolvency regime, it appears landlords are taking steps to protect themselves further.
“For now, we can only wait to see if landlords follow through with threatened action, but retail occupiers would be well-advised to check the notice provisions in their leases and remain alert to notices and correspondence from their landlords.
“Given the grace period for payment there is no need for immediate panic if a landlord serves a demand, but retailers do need to diarise the deadline for payment, watch for developments over the next few weeks and ensure they are properly advised as to the best way to protect their positions.”
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