Commercial Rent (Coronavirus) Bill (HL Bill 92)

continued    

Using CRAR (the commercial rent arrears recovery power)

4(1)The landlord may not, during the moratorium period for the protected debt,
use CRAR in relation to the debt.

(2)This means that during that period—

(a)5an authorisation to exercise CRAR on behalf of the landlord in
relation to the protected debt may not be given,

(b)a notice of enforcement may not be given in relation to the protected
debt on behalf of the landlord, and

(c)the protected debt is to be disregarded in calculating the net unpaid
10rent for the purposes of section 77 of the Tribunals, Courts and
Enforcement Act 2007 (the rent recoverable using CRAR).

(3)In this paragraph “CRAR” and “notice of enforcement” have the same
meaning as in Chapter 2 of Part 3 of that Act.

(4)In section 77 of that Act, after paragraph (b) of subsection (1) insert “;

(c)15it is not excluded from recovery using CRAR by paragraph 4
of Schedule 2 to the Commercial Rent (Coronavirus) Act 2022
(temporary moratorium on enforcement of protected rent
debts).”

Enforcing a right of re-entry or forfeiture

5(1)20The landlord may not, during the moratorium period for the protected debt,
enforce, by action or otherwise, a right of re-entry or forfeiture for non-
payment of the debt.

(2)No conduct by or on behalf of the landlord during the moratorium period,
other than giving an express waiver in writing, is to be regarded as waiving
25a right of re-entry or forfeiture, under the business tenancy, for non-payment
of the debt.

(3)For the purposes of determining whether the ground mentioned in section
30(1)(b) of the Landlord and Tenant Act 1954 (persistent delay in paying rent
which has become due) is established in relation to the business tenancy, any
30failure to pay the debt during the moratorium period is to be disregarded.

6(1)This paragraph applies where—

(a)a superior landlord enforces, by action or otherwise, a right of re-
entry or forfeiture in relation to a superior tenancy during the
moratorium period, and

(b)35the tenant applies for relief from forfeiture in relation to its interest
in the property comprised in the tenancy.

(2)For the purposes of determining whether to grant the tenant relief from
forfeiture and, if so, the terms of such relief, the court must disregard any
failure to pay the protected rent debt.

40Using landlord’s right to appropriate rent

7(1)This paragraph applies in relation to a payment of rent under a business
tenancy which is paid during the moratorium period for the debt at a time
when—

(a)the tenant owes the landlord an unprotected rent debt in addition to
the debt, and

(b)the tenant has not exercised the tenant’s right to appropriate the
payment to any particular rent debt owed to the landlord.

(2)5The landlord’s right to appropriate the payment must be used to apply the
payment to meet the unprotected rent debt before it is applied to the
protected rent debt.

(3)In this paragraph an “unprotected rent debt” is a debt consisting of—

(a)rent that is not protected rent, or

(b)10interest on rent that is not protected rent.

8(1)This paragraph applies in relation to any payment of rent under a business
tenancy which was paid during the period mentioned in sub-paragraph (2)
at a time when—

(a)the tenant owed the landlord an unprotected rent debt in addition to
15the debt, and

(b)the tenant had not exercised the tenant’s right to appropriate the
payment to any particular rent debt.

(2)The period relevant for the purposes of sub-paragraph (1) is the period—

(a)beginning with the day after the last day of the protected period for
20the debt, and

(b)ending with the day before the first day of the moratorium period for
the debt.

(3)During the moratorium period for the debt, the landlord’s right to
appropriate the payment must be used to apply the payment to meet the
25unprotected rent debt before it is applied to the protected rent debt.

(4)If the landlord used that right during the period mentioned in sub-
paragraph (2) to appropriate the rent to the debt, then—

(a)the appropriation of the payment to the debt is ineffective to the
extent of the unprotected rent debt, and

(b)30the payment is to be treated for all purposes as having been
appropriated to the unprotected rent debt first.

(5)In this paragraph “unprotected rent debt” has the same meaning as in
paragraph 7.

Using tenant’s deposit to apply towards unpaid rent debt

9(1)35This paragraph applies where a tenancy deposit is available to the landlord
for the purpose of applying towards an unpaid rent debt.

(2)The landlord may not, during the moratorium period for the debt, recover
the debt from the tenancy deposit.

(3)If the landlord has lawfully recovered the debt from the tenancy deposit
40before the beginning of the moratorium period, the tenant is not required to
make good any shortfall in the deposit before the end of that period.

Section 26

Schedule 3 Winding-up and bankruptcy petitions

Prohibition on presenting a winding-up petition solely in relation to a protected rent debt

1(1)This paragraph applies where a landlord under a business tenancy is owed
5a protected rent debt and the tenant is a company.

(2)The landlord may not, during the moratorium period for the debt, present a
petition for the winding up of the company under section 124 of the
Insolvency Act 1986 on a ground specified—

(a)in the case of a registered company, in section 122(1)(f) of that Act, or

(b)10in the case of an unregistered company, in section 221(5)(b) of that
Act,

unless the landlord is owed a debt by the company which is not a protected
rent debt.

(3)In this paragraph—

• 15“moratorium period”, in relation to a protected rent debt, has the same
  meaning as in section 23;

• “registered company” means a company registered under the
  Companies Act 2006 in England and Wales or Scotland;

• “unregistered company” has the same meaning as in Part 5 of the
  20Insolvency Act 1986.

(4)This paragraph, so far as relating to registered companies, applies to limited
liability partnerships.

Prohibition on presenting a bankruptcy order petition in relation to a protected rent debt

2(1)This paragraph (and paragraph 3) applies where the landlord under a
25business tenancy is owed a protected rent debt and the tenant is an
individual.

(2)The landlord may not present a petition for a bankruptcy order against the
tenant on a ground specified in section 268(1)(a) or (2) of the Insolvency Act
1986 where the demand referred to in those provisions related to any
30protected rent debt and was served during the relevant period.

(3)The landlord may not present a petition for a bankruptcy order against the
tenant on a ground specified in section 268(1)(b) of that Act where the
judgment or order referred to in that provision related to any protected rent
debt and the claim for that debt was issued during the relevant period.

(4)35If a petition mentioned in sub-paragraph (2) or (3) is presented, the court
may make such order or give such directions as it thinks appropriate to
restore the position to what it would have been if the petition had not been
presented.

(5)If it appears to the interim receiver or special manager that the petition is one
40mentioned in sub-paragraph (2) or (3), the interim receiver or special
manager must refer the matter to the court to determine whether to make an
order or give directions under sub-paragraph (4).

(6)Neither the interim receiver or special manager is liable in any civil or
criminal proceedings for anything done pursuant to an order made under

section 286 or 370 of the Insolvency Act 1986 in relation to a petition that
relates to any protected rent debt.

(7)The “relevant period” is the period which begins on 10 November 2021 and
ends with the day mentioned in section 23(2)(b).

(8)5In this paragraph “claim” includes a counterclaim or any other way of
claiming payment of a debt in civil proceedings.

(9)This paragraph is to be regarded as having come into force on 10 November
2021.

Bankruptcy orders made before the day on which this Act is passed

3(1)10This paragraph applies where—

(a)a court makes a bankruptcy order against the tenant on a petition
from the landlord under section 267 of the Insolvency Act 1986,

(b)the order was made on or after 10 November 2021 but before the day
on which this Schedule comes into force, and

(c)15the order was not one which the court would have made had this
Schedule been in force at the time.

(2)The court is to be regarded as having had no power to make the order (and,
accordingly, the order is to be regarded as void).

(3)Neither the trustee, official receiver, interim receiver or special manager is
20liable in any civil or criminal proceedings for anything done pursuant to the
order.

(4)The court may make such order or give such directions as it thinks
appropriate to restore the position to what it was immediately before the
petition was presented.

(5)25If at any time it appears to the trustee, official receiver, interim receiver or
special manager that—

(a)a bankruptcy order made by the court is void by virtue of sub-
paragraph (2), and

(b)it might be appropriate for the court to make an order or give
30directions under sub-paragraph (4),

the trustee, official receiver, interim receiver or special manager must refer
the matter to the court to determine whether to make such an order or give
such directions.

Interpretation

4(1)35In this Schedule—

• “interim receiver” means a person appointed under section 286 of the
  Insolvency Act 1986;

• “special manager” means a person appointed under section 370 of that
  Act;

• 40“trustee” means the trustee of a bankrupt’s estate.

(2)In this Schedule, references to the “tenant” include a person who has
guaranteed the obligations of the tenant under a business tenancy.