Lockdown easing delay: what support is available?

The delay in fully reopening the economy until 19 July was announced by the Prime Minister without any further financial support for business in terms of the furlough scheme or business rates relief.

Step four of the lockdown easing plan was delayed due to increasing cases of coronavirus.

Firms face extra costs from July even if not allowed to fully reopen, as employers will need to start paying 10% of furloughed employee wages as well as a proportion of business rates.

However, evictions by landlords of commercial tenants has been put back to March 2022.

Restrictions on commercial evictions

The government has announced that the current restrictions on commercial evictions will be extended until 25 March 2022.

Stephen Barclay MP, Chief Secretary to the Treasury, said:

“We will introduce legislation in this parliament session to establish a backstop so that where commercial negotiations between tenants and landlords are not successful, they go into binding arbitration,”

“Until that legislation is on the statue book existent measures will stay in place, including extending the existing moratorium in place to protect tenants from eviction to 25 March 2022.

“All tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord.”

The idea behind the measure is to ringfence COVID-related commercial rent arrear and encourage landlords and tenants to agree repayment plans.

Where agreement cannot be reached, a binding arbitration process is likely to be the next step with a view to reaching a formal agreement.

The extension applies to all businesses, although the new measure will only cover those impacted by closures. So, rent debts built up before March 2020 and after the date when relevant sector restrictions on trading are lifted will be actionable by landlords as soon as the tenant protection measures are lifted.

The arbitration process will be delivered by private arbitrators

Other business support measures

The suspension of liability for wrongful trading expires on 30 June 2021 for directors who continue to trade a company through the pandemic with the uncertainty that the company may not be able to avoid insolvency in the future

Termination clauses are prohibited. Small suppliers remain exempted from the obligation to supply until 30 June 2021.

The modifications to the new moratorium procedure, which relax the entry requirements to it, are extended until 30 September 2021. A company may enter into a moratorium if it has been subject to an insolvency procedure in the previous 12 months

Statutory demands and winding-up petitions continue to be restricted until 30 June 2021.

Further information

Check out our Business after COVID-19: Transition Knowledge Hub and our Restructuring Knowledge Hub for more guidance and advice on managing the pandemic.