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Bullring

They recently announced that trading at its out-of-town retail parks was almost back to pre pandemic levels and that as a result rent collection had improved across its portfolio. 

This is encouraging as footfall and sales at their covered shopping mall properties remain at 75% and 89% of 2019 respectively. 

Despite rent falling sharply during the pandemic and lockdown periods, British Land collected 85% of the £87 million due in rent during the June quarter, up from 72% collected in December. They received 91% of rent due in the March quarter so industry experts will be watching the September take closely. 

The company has already informed tenants that “with trading restrictions substantially lifted and the vast majority of our customers trading well and paying the rent due, we do not expect to make further concessions this quarter”.

There will be no more rent concessions or write offs forthcoming from Hammerson either. 

The owners of the Birmingham Bull Ring and Brent Cross shopping centre in London have also warned tenants that “all avenues to collect rents due are being pursued.”

They said they had waived, written off or not collected £26 million of rent due in 2020 and £15 million due so far for 2021. 

This contributed to their only collecting 62% of the £154 million due in total rent this year and still have 11% of their annual £264 million rent take outstanding from last year. 

“Many retailers continue to report high sales and conversion rates as visitors shop with purpose”, Hammerson said.  

Commercial tenants who owe outstanding rent should expect that their landlords will also act with purpose from September onwards to recoup outstanding debts once the restrictions on creditor recovery actions ends on the last day of the month. 


Why are businesses with outstanding bounce back loans being stopped from closing down?


The announcements come ahead of news that the government is planning to bring forward new insolvency legislation aimed at protecting businesses from accrued debt and rent arrears as a result of the pandemic. 

A policy paper has been published with new provisions that will ringfence rent arrears caused by “enforced closures” and introduce a process of binding arbitration between landlords and their commercial tenants. 

The British Property Federation (BPF) reported that UK businesses had built up a combined £7.5 billion of commercial rent arrears up to June 30 2021 due to the overall impact of Covid-19.

According to the published guidance, the new provisions will be a backstop or a last resort to be used where landlords and tenants haven’t been able to settle a dispute and come to a mutual settlement on how rent arrears will be paid. 

They will be published before any system is put into law to give landlords and tenants the necessary time and motivation to negotiate. 

A spokesperson said: “As soon as legislation is passed, the commercial tenant protection measures will only apply to ring fenced arrears. This includes rent debt accrued from March 2020 by commercial tenants affected by Covid-19 business closures until restrictions for their sector are removed.

“This means that landlords will still be able to evict tenants for the non-payment of rent prior to March 2020 and after the end of restrictions for their sector and who have not been affected by business closures during this period.”

The new rules will come in addition to the amendment to Section 82 of the Coronavirus Act 2020 which prevents landlords of commercial properties from evicting tenants for the non-payment of rent until March 25 2022.  

This is also the date when the suspension of Commercial Rent Arrears Recovery (CRAR) is also due to expire. 

Landlords are being prevented from using CRAR unless the tenant owes 554 days’ rent by June 24 2021 but this amount may change once the restriction lapses.

In reality, all of this means that it’s a return to normal contractual arrangements under the terms of the signed lease for tenants that are able to pay their rent arrears in full and weren’t affected by closures. 

It also stipulates directly that it doesn’t include any debts accrued outside the ring fenced period. 

The aim of the arbitration is to be an “impartial and manageable process” and a faster or easier alternative to going through the courts.  The government does expect that landlords and tenants both contribute to the cost of the arbitration if they are both found to have negotiated in good faith.

The arbitrator will also have the power to award the whole cost of arbitration to one side if they find the other party has not been entering into the spirit of the agreement. 

So we know the roadmap and what’s going to happen but what is the situation for businesses with rent arrears now?

In short, the government expects companies that are open and trading normally to pay their ongoing rent in full according to their lease terms.  If they’ve agreed different conditions with their landlords then they should stick to them - normal operation periods are not covered under the new rules. 

To help their case, and avoid any doubt, if tenants have any arrears covered by the ringfenced period, they should state in writing to their landlord what time period payments they make should be apportioned to. 

Landlords can charge interest on rent incurred from the end of the ring fenced period onwards if interest payments are included in the lease terms. Also if the tenants breach any other lease terms which could give rise to forfeiture (e.g. property damage) then the landlord is still able to evict them on that basis.


Can a landlord enforce rent arrears at the moment?

Even though the legislation is on its way, don’t think that landlords are powerless to bring enforcement action against delinquent tenants. 

They still have a range of options available to them including:-

The ultimate aim of the legislation is to help viable businesses continue to trade their way back to profitability and pay off any rent debts or arrears that are genuinely down to the pandemic.  

Some landlords and tenants had already made agreements on rents but there are always some who can’t or won’t reach a compromise which the arbitration will help move to a conclusion.

There will be others who suspect that the moratorium on evictions is being used as an unfair tool to avoid paying rent and that it will give them the necessary leverage to definitively resolve the outstanding situation.  

One area where there could be clearer indications of intent from the government is how businesses in sectors which moved between trading restrictions during the pandemic will be treated. 

This includes non-essential retailers and eat-in restaurants that were subject to restrictions but were still able to trade such as if the restaurant offered a takeaway or pick-up meal delivery service.

Like any new legislation, expect it to be tested by individual circumstances early after it’s rolled out. 


Rent arrears, like unpaid bounce back loans and outstanding business rates debt, might seem like an immovable object against the irresistible force of a landlord eager for repayment but if you can’t go through a problem, you can always go around it. 

Unmanageable debt built up during the pandemic might appear to be a terminal issue but it needn’t be. 

Once you get in touch with us to arrange a free initial consultation, we can help you take stock of your situation and plan a manageable and achievable forward roadmap to follow. 

Whether it’s to create a restructuring and rescue plan that would be acceptable to your creditors or if an orderly liquidation is the only way forward - we can explain all the options and steps needed to bring you and your business to their next stage.

Nightclub
Britain’s nightclubs, bars and casinos are due to reopen from June 21st at the earliest with most being closed for nearly 12 months since the start of the first national lockdown in March 2020. 

But the Night Time Industries Association (NITA) say that even if this happens, the sector is still facing an existential threat to its very existence. 

A recent survey of more than 100 of their members reported that 81% say they won’t survive beyond the end of March without further support from the Government.   

Additionally, 86% of respondents have had to make redundancies this year with 65% making more than half of their entire workforce redundant before the end of 2020. This is before taking into account that 43% of respondents had not received any grant support from the government during this period.  

While lots of industries are pleading their case to the Chancellor for special treatment and support, the night time industry feels its case is first among equals for consideration. 

NITA Chief Executive Michael Kill outlined the various threats his members are facing on multiple fronts. 

He said: “Throughout this pandemic and the restrictive measures levied against the sector, it’s clear that our businesses are being systematically eradicated from society.

“They continue to be excluded from the narrative of press announcements and planning, and though misconceptions and a misguided understanding of the sector, we’ve been given little or no opportunity to re-engage even with very clear ability to open our spaces safely.”

Kill outlined how current proposed changes in planning reform under permitted development rights was another huge threat to the sector as it had the potential to allow for the demolition and rebuilding of vacant and redundant light industrial buildings used as clubs and venues as housing instead. 

He said: “Given that over 88% of nightclub businesses are over two quarters of rent in arrears, we’re poised for a windfall of landlords at the end of March when the forfeiture moratoria comes to an end. Reclaiming their property and utilising this planning mechanism to convert many of our much loved cultural spaces and social environments into housing. 

“Getting help from banks and financial services, whether through insurance or lending within the sector, has been near impossible, confidence is at new lows coupled with the ineligibility to access much financial provision outside of furlough. 

“The extensive period of closure without recognition is perceived by the sector as negligence.”

A recent All-Party Parliamentary Group report into the Night Time Economy found that it contributed as much as £66 billion to the UK economy but also acknowledged the unique logistical challenges facing an industry that thrives on close human contact as part of the experience. 

While the Group suggested that latest flow testing along with vaccinations could be a key component in the reopening, Luke Laws, operations director of Fabric nightclub in London said that the reality of this would see a socially-distanced queue stretch 1.7 miles from their front door if 2000 people, their capacity, wanted to gain entry. 

This also doesn’t take into account if negative Covid-19 tests were required for entry - where the clubbers would wait for results and who would be responsible for administering and paying for the tests. 

Mr Laws said that they had looked at scenarios such as renting and closing off nearby roads to allow for this but this would be untenable as it would involve at least 240 additional staff just to administer. 

Owners also cite the issue of dancing and compulsory mask wearing as other negative factors affecting their reopening. For instance, having a socially distanced dancefloor would see customer numbers fixed at below break-even points for many operators. 

The industry as a whole will be hoping for targeted specific support coming from the Budget if the majority of clubs and bars are to survive in the long run but with lots of other industries also seeking support - they might have to remain behind the velvet rope for longer. 

Nobody likes calling last orders but it’s an essential task for any operator. 

This also applies if they take a long, hard look at their own business circumstances and likelihood of recovery. 

While there may be some support forthcoming in the Budget, it might be too little, too late if isolated or insufficient. 

The year of lockdown might also have given owners different ideas and impetus about what they want to do going ahead. 

They might have discovered a new direction they want to pursue or a new venture they’d like to try but can’t because they think their previous one will hold them back and weigh them down. 

Have a chat with us first. 

A free initial consultation with one of our expert advisors will allow us to explore options with you including various ways on how to close your business with a minimum of stress and fuss. 

There’s always a weekend every week so if you feel the party’s winding down, let us help you start your next one.

cant pay
 
 
 
 
 
 
Unpaid business invoices have risen to a shocking 23% from the beginning of this year according to a recent statistical analysis of 26 million invoices of 3.7 million businesses.
 
The actual number is possibly higher as the data only considered payments later than 10 days overdue.
 
The Federation of Small Businesses (FSB) estimates that some 50,000 SMEs fail annually because of delayed payments and research from BACS, the bank payment system, found that the problem was getting worse. 
 
In the previous 12 months alone, debt from late payments in the UK had risen to an incredible £23.4 billion, which was an increase of £10 billion on 2018. 
 
The cost of recouping this owed money through legal means is estimated to be £4.4 billion a year which averages to £25,000 per company - just for chasing their legally owed debts. 
 
So every business in the UK theoretically starts the year £25,000 in the red for no reason at all. 
 
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Other groups that are usually insulated from non-payment are starting to feel conditions tightening as the pandemic lockdown continues. 
 
Several retail landlords are demanding more support and protection from the government for the non-payment of rent and are also furious about new legislation passed last month that barred them from issuing statutory demands and winding-up orders on tenants until June 30 2020 at the earliest.
 
This followed the introduction of a three-month moratorium on evictions for non-payment of rent.  
 
They claim that while well intentioned, the rules now effectively enable otherwise monied tenants, some of whom have reopened and are trading physically or online, to claim that they “can pay but won’t pay.”
 
The overall feeling among an influential group of Landlords, who met recently to discuss the issues was that while they were all for supporting small businesses with rent holidays if they genuinely couldn’t pay, they shouldn’t have to help larger companies that decide to withhold rent.
 
One said: “Seriously, should I suddenly have to give Coral a rent holiday?
 
The British Property Federation estimates that retailers had paid only a third of their estimated collective £2.5 billion rent bill at the end of March and expect rental payments to “hit rock bottom” in June. 
 
Office tenants paid about two thirds of their £2.1 billion rent bill and this sum was expected to halve in June too. 
 
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The issue of non-payment of rent and bills is forcing landlords and tenants to exploit every section of the law to try and find a loophole to provide redress. 
 
One recent High Court case outlines the lengths some will go to. 
 
In Shorts Gardens LLB v London Borough of Camden Council (2020) the judge dismissed an action from Shots to suspend winding-up orders brought against it by Camden Council and Preston City Council for non-payment of business rates. 
 
Shots made the argument that it was not liable for rates for various reasons and wanted the judge to not deliver a verdict and stay their order to, in the plaintiffs own words, “use the opportunity to help steer Parliament to what would be fair in the mind of public opinion.”
 
Unsurprisingly, the judge disagreed and allowed the winding-up orders to proceed. 
 
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Nobody likes paying rent but when you sign a lease it’s commonly understood that you will. 
 
The opportunity to bolster balance sheets and accounts is tempting, even if you can afford to pay rent, especially if you read about your competitors doing the same. 
 
But none of the Coronavirus support schemes will last indefinitely
 
Some of them will come to an end before others and the legal system will be one of the first to shift back into top gear when any lockdown is lifted. 
 
Unless you want to be one of the many businesses spending their newly acquired rental savings on defending legal actions from their creditors the moment they’re allowed to be brought, it might be advisable to consider other ways to make savings. 
 
Get in touch with one of our expert advisors today to arrange a free, initial virtual consultation. 
 
We can help you review your business root and branch to find economies and other ways to cut your costs, maximise your assets and find the key savings that will be the difference between emerging from the lockdown head and shoulders ahead of your competition or nervously looking over the other shoulder for an angry landlord...

Boots
 
 
 
 
 
 
Centuries old practices will fall by the wayside, to be replaced by new structures and codes that have only come of age in the past few weeks - Zoom meetings anybody?
 
Received wisdom will be reexamined and while some customs and rules will remain, others will be looked back on with a mixture of amusement and bewilderment that they were followed for so long. 
 
We doubted that paying rent would be one of these however, but these are strange days. 
 
Firstly, we covered how some retailers such as Boots and Matalan have taken issues into their own hands and refused to pay rent for this Q2 2020 which came due earlier this month.
 
The landlords of Boots in particular are particularly aggrieved as the store is classified as an essential business so remains open and generating some income and sales during this period. 
 
One of the landlords said: “We’re trying to support the little guy, the small independent traders whose sole income is through the cash register. I said to Boots - my ability to help those people is directly related to the people who could and should pay rent, paying that rent.”
 
Then there were reports that other retailers beginning with the Edinburgh Woollen Mill chain of retailers are including pandemic clauses into any new leases it’s due to sign with landlords of Bonmarche stores that their owner, Philip Day, brought out of administration last year.
 
The clauses would mean that EWM could agree on new Bonmarche store leases without having to pay any rents upfront until the lockdown is lifted and non-essential stores can reopen for business. 
 
This also means that the company will be refunded any rent payments by their landlords should another pandemic hit in the future. 
 
It seems that the authorities have been paying attention because the government has now banned landlords from using the threat of statutory demands and winding-up orders to claim any unpaid rent due to the crisis. 
 
Commercial tenants also have the option to delay full rent payments unless they are already three months in arrears. 
 
Section 82 of the Coronavirus Act 2020 already prohibits the forfeiture of commercial leases until 30 June 2020 (or longer if the government deems necessary) specifically for non-payment of rent. 
 
As written, the law didn’t prevent other actions including recognised debt recovery devices until the new measures were introduced. 
 
While some businesses have no revenue coming in, the government hoped that landlords would have some forbearance and look to cooperate with their otherwise profitable tenants.  
 
The reality is that some landlords decided to take strong measures first because they were also struggling for income from tenants, some of whom aren’t reciprocating openly themselves. 
 
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A new business world is coming. 
 
It might be weeks or months away but it will arrive and bring a host of changes with it. 
 
Rent boycotts, debt recovery bans and niche rental clauses may be the first outliers of an evolving environment but they certainly won’t be the last. 
 
You need to start thinking about how your business is going to adapt to a new environment when it becomes time to open up permanently again. 
 
Where will you have a strong advantage? Where will you be in danger of being outflanked and left vulnerable? What part of your company will need evolution and which revolution? 
 
Get in touch with us today to schedule a conversation around these topics and more. 
 
We’re used to asking questions that need more than a yes or no answer and make you really think about what you and your business will need going ahead so you can re-emerge with all systems go. 

Lakeside
 
 
 
 
 
This might seem like a hard but fair response - if you take out a lease on a property and the terms state that you’d pay back a regular amount on an agreed date in return for being able to rent the premises - then that’s what you do. 
 
The National Residential Landlords Association (NRLA) are already appealing for guidance as many members are reporting that tenants are under the impression that they can cease paying rent due to the pandemic.
 
Coincidentally, some of the major remaining UK high street retailers including Primark, Burger King, B&Q, Topshop and JD Sports have decided to take the bold step of announcing that they too, don’t feel like paying and consequently they wouldn’t be paying their regular quarterly rent when it comes due this month. 
 
The coronavirus lockdown is already affecting commercial landlords significantly. 
 
Two of the largest in the country - Intu and Hammerson - announced that they had received just 29% and 37% respectively of their total quarterly rents due and had been “deluged with requests for rent deferrals, cuts or waivers” from their tenants - the majority of whom have been forced to close their own establishments. 
 
Under normal circumstances this might have been met with a little more understanding but for Intu especially, this collapse in income couldn’t have come at a worse time. 
 
The group, which owns such flagship locations as the Trafford Centre in Manchester and The Metrocentre in Gateshead, was already in danger of breaching loan covenants due to being unable to refund excessive debt and losing a significant portion of its rental income could prove terminal. 
 
Intu’s Chief Executive Matthew Roberts confirmed the business was in urgent talks with its lenders about waiving some of the conditions on their owed debts. 
 
If the value of its property portfolio continued to fall it could be forced to make immediate repayments of £143 million while even a 10% fall in their rental income would trigger demands for an additional £34 million.  
 
Intu said it had £184m available in cash and loans as of 24th March so the situation is serious to say the least. To compound this the ratings agency Fitch downgraded their status even further yesterday.
 
This existential funding crisis explains why Intu are not playing when it comes to their response - threatening hold-out landlords with statutory demands for payment.
 
A spokesperson said: “We’re happy to engage with customers on a case-by-case basis, but we have neither the desire or financial capacity to bankroll, global, well-capitalised brands who have just decided they don’t want to pay their rent”. 
 
“Our approach will be the same to any UK brands who behave in a similar way, not least because they are beneficiaries of significant financial support from the government.”
 
Ouch.
 


 
 
If you imagine the UK economy as being put together like a jigsaw puzzle then the Covid-19 Coronavirus pandemic outbreak and response has taken it and thrown it up in the air. 
 
Some pieces may land more or less where they were and can be reincorporated with a minimum of fuss but for others, it’s a battle to avoid being swept away altogether. 
 
We’ve gathered together all the latest information and support that small and medium-sized businesses can access right here but like puzzle pieces, every company is different with their own concerns and questions about the weeks and months ahead.
 
Our team of experienced advisors are available to connect with you right now. 
 
After you contact us, they can arrange a convenient free virtual initial consultation with you to find out exactly what your situation is and how you can best approach overcoming it. 
 
We can then work together to produce a roadmap to give your business the best chance to survive then thrive as well all look to put the pieces back together again.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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