![]() ![]() The directors' actions are under the supervision of a Monitor who must be an Insolvency Practitioner. Initially, this moratorium is in place for 20 business days but can be extended with consent for up to a year. This provides a new moratorium to protect a company from actions by its creditors, but the company remains under the control of the directors. One of the highlights of the new legislation is the introduction of a Chapter 11 type procedure. This is demonstrated by the speed at which The Corporate Insolvency and Governance Act was rushed through both Houses and came into effect on the evening of 25 June. The Government has shown its desire to bring rescue to the forefront as the country emerges from the economic downturn caused by the pandemic. Company Voluntary Arrangements and Moratoriums In addition, there is a possibility that the landlord will seek to charge back their legal and other costs for the recovery of unpaid sums. It is worth noting that where the parties do not agree to a concession, interest is payable on any late payment of rent. Now may be the time for a frank and upfront conversation with the landlord to discuss a rent concession. Retailers will need to evaluate balance sheets and look at inventories, bearing in mind that supply chains could be in the same predicament. It is important for retailers to take proactive steps now to prevent legal action being taken come the autumn. From small independents through to high street giants, the lockdown will bring huge changes to an industry already under pressure. They will inevitably take legal action to forfeit the lease and, amongst other measures, issue winding-up petitions.įew bricks and mortar stores remain unaffected by the pandemic. Come the Christmas shopping period, many landlords will run out of patience, particularly if they hold significant rent deposits and feel they can easily re-let premises at a higher rate.Some will be accommodating and agree on extended payment terms, but others will not. Once the moratorium is lifted, landlords will expect outstanding rents to be paid. For struggling retailers, the Government's measures may simply postpone the inevitable.If rent is not paid during the moratorium period, a landlord remains entitled to forfeit for non- payment of that rent in the future. itis not a waiver of a landlord's right to forfeit the lease.Rents are due as normal unless an alternative agreement has been made with the landlord However, it is by no means a long-term solution because: This moratorium extension will be welcomed by retailers as a much-needed breathing space. The lease forfeiture moratorium, introduced in March and due to expire on 30 June, has been extended until the end of September. Lease forfeiture moratorium extendedĪt the beginning of June, the Government announced an extension of its rent protection period for commercial tenants. ![]() However, retailers have been given a lifeline. Quite apart from consumer migration from the high street to the internet, retailers are facing a rise in business rates and increased rents, which must be paid to landlords three months in advance. The Times reported that during May, retail prices fell at the fastest rate on record as retailers resorted to heavy discounting. While this stock may have been in demand pre-lockdown, much of it will be out of sync with consumer needs in the summer months. Meanwhile, high street retailers unable to trade online are dealing with the combined effects of 100 days of closed doors and a build-up of stock. In May alone, online sales increased by 130%, while Amazon reported sales of more than £7,500 per second as COVID-19 turbocharged online shopping. Not surprisingly, online retailers saw a record jump in sales during the lockdown. Fashion and clothing have been particularly hard hit. This collapse in discretionary spend has already led to a spate of insolvencies across the UK retail sector. Over the past few months, consumer spending has halved. In this article, we look at how COVID-19 has affected the high street, and ask "what's next for retail?" The COVID-19 effect Even as the shops reopen, British Retail Consortium CEO Helen Dickinson said that consumer demand is expected to "remain weak", and retailers face an "uphill battle" compounded by rising costs. The pandemic has accelerated trends in a sector that was already struggling to redefine itself in response to changing customer preferences. When compared to the same week in 2019, footfall was down 54%. ![]() Is this good news for retail? Not entirely. In that week, queues stretched around the block for the most popular stores, and footfall was up 45% on the previous week. According to the headlines, shoppers flooded back to the high streets of England when non-essential stores reopened on 15 June. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |