You are here: Home > News & events > Law Updates > Second Quarter Rent Day Highlights The Severity Of The Current Economic Crisis

Second Quarter Rent Day Highlights The Severity Of The Current Economic Crisis

21 May 2009

The 24 June 09 will see the [Q2] second rent quarter day of 2009 upon us. This is the long-established date when the next 3 months of rent falls due. This is likely to bring an increase in the number of insolvencies shortly after this date as the tenants are unable to satisfy all of their debts as and when they fall due and they are forced into an insolvency.

Landlords make tough choices whilst tenants struggle to survive

As a landlord, specialist recovery advice needs to be sought as soon as a rent day has past without payment.  Tenants who are struggling also need to seek advice as to their personal position and any liabilities which may be personally incurred following a breach of agreement.

The situation in the last year has shown us that regardless of the size of business from a multinational household chain with multiple bases or a small trading unit, no one is safe from the effects of the current worldwide slowdown.

Latest figures from the Insolvency Service show a sharp increase in liquidations of companies where there is no chance of the business being turned around and saved from extinction. This means that landlords are facing tough choices about recovering overdue rent whilst tenants struggle to make ends meet to survive. The time to seek guidance and advice is actually before the rent quarter is due! There are a number of strategies which can be adopted to ensure that both parties benefit.

Monthly Billing

The British Retail Consortium is currently running a campaign to get rid of the quarter days and replace them with monthly billing. This makes the cash-flow more manageable as businesses have the same smaller outgoing each month rather than needing to store up cash for 3 months (which often gets spent on another pressing bill). Looking at other strategies such as a payment holiday or deferred payments with a personal guarantee can all be investigated. In order to be successful parties need to be open with each other when problems start to arise. Advice from experts who can act as intermediaries can really assist in getting pragmatic solutions.

Vacant Premises

Vacant premises are the last thing that either party wants and when the company is entering into the realms of insolvency the time to try to do something is often too little to late. Under the Insolvency Act 1986 statutory provisions become applicable and the scope for the parties to do deals between them is also very restricted and generally these deals are not worthwhile by this stage in any event as the writing is firmly on the wall.

Furley Page Debt Recovery and Insolvency Team

Our team aims to deal with these issues quickly and efficiently at an early stage to ensure that the commercial relationship between the parties does not deteriorate beyond salvage, or where it already has the maximum amount of options are considered and explored.

We know that one size solutions rarely fit and our specialised Debt Recovery and Insolvency Team has substantial experience in assisting both Landlords and Tenants to ensure the long-term survival of both. We pride ourselves on our commercial pragmatic advice combined with the legal knowledge to ensure that you get the best possible outcome from a difficult situation.

Should you require any specific legal advice on the issues covered above please contact Furley Page’s Debt Recover and Insolvency Manager, Martin Kingman.

This information has been prepared to highlight some of the key issues relating to landlord and tenant rent recoveries. It is intended for general guidance only and is no substitute for specific legal advice. It is based on our understanding of the current legal position and is, of course, subject to changes in the law after May 2009.

‹ Back

Quick contact

Press Office

For all media enquiries contact Edwards Harvey Associates on 01622 604600 or email enquiries@edwardsharvey.com

Furley Page Solicitors in Kent, London, Canterbury, Chatham & Whitstable
Get in touch on 0845 603 10 57