Comment: proposed code of practice for commercial landlords and tenants is a fudge (Plus news of struggling firms suppliers may want to avoid)
Commercial tenants (and in particular those in retail, hospitality and travel) have been hammered by the Covid-19 crisis and the lock down. The Government’s Corporate Insolvency and Governance Bill has given protection to commercial tenants from eviction due to rent arrears until June 30, 2020.
What happens then? The answer is despite all the warm words in the proposed draft copy of the Government’s code of practice about the two parties agreeing a rent payment plan which prevents tenants being evicted there is nothing in it which prevents a landlord from kicking out a tenant who is three months behind in their rent. The tenant has to prove their non-payment is due to the lock down and pandemic crisis otherwise as one high street retailer said ‘the code of practice isn’t worth the paper it’s written on’.
A missed opportunity
It is another missed opportunity to give the High Street and small and medium sized businesses an even break in an incredibly difficult economic climate. Commercial rents only ever go up, while earnings for businesses (I’d say the vast majority in 2020) will go down. Utility bills only go up, there’s the long standing bone of contention of the unjust business rates – and the lack of taxation of firms like Amazon who pay a fraction of tax in proportion to what the average print company, newsagent, sign-maker, shop, courier or pub has to pay.
What is needed is comprehensive legislation that protects British businesses, manufacturers, retailers, hospitality and the service industries from unfair competition and high overheads. Instead the proposed code of practice for commercial landlords and tenants will be a fudge. For those it is aimed to help it is a merely a paper umbrella for a Covid-19 downpour while for landlords it is merely an inconvenience but essentially allows for the business of evictions and high rents to continue as usual.
News of famous firms in financial trouble suppliers may want to avoid
Poundstretcher
The high street retailer has remained largely open throughout the shut down as the nationwide chain sells food and medicines and was thus one of the exempted businesses. Despite this the company is in trouble and looking to launch a company voluntary arrangement with its creditors. In particular is wants its landlords to cut rents to 330 of its 450 stores.
Travelodge
A group of landlords have demanded the hotel chain Travelodge reveal details of its planned CVA ahead of a creditors meeting on June 19. The CVA would see a big cut in rents as well as shareholders injecting £240m into the business to ensure no hotels are closed.
The Restaurant Group
Another firm in the hospitality industry seeking a CVA is The Restaurant Group (TRG). If the revised finances and rents can be agree the group who own Frankie & Benny’s could close 125 outlets of their 226 sites. Reports say their Chiquito, Coast to Coast and Garfunkel’s brands will also be also impacted, but its Wagamama restaurants are safe.
Warning from ICSM Credit’s Ian Carrotte
When fashion brand Autonomy went into administration in March it owed suppliers £940,000 and was ordering stock right up tothe last minute. No business is safe from insolvency. It’s a warning to all suppliers who go on blindly suppling goods and services which will never be paid for. There are a lot of companies in all industries that are struggling to survive but as long as they are paying suppliers, or have a repayment plan in place or another arrangement that guarantees payment – then fine. But if a client airily dismisses concerns over non-payment then the rule is DO NOT SUPPLY THEM.
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk