21 January 2021 Adrian Leopard 232 Uncategorized Difficult plight ahead for hospitality businesses. Landlords poised to jump Previous Article End of an era – Mr Marmite departs for Florida Next Article 400 people at wedding breaking the rules Big problems ahead in April when rental moratorium comes to an end Yesterday we pointed out that it is going to be hard for hospitality businesses to recover and that the end of March is usually a bad time because bank interest or rent bills are due to be paid. Unfortunately what we did not point out because it was only tangential to our report was that at the end of this March at the moment the moratorium on rent payments comes to an end and there is at present no plan to extend it. As we already know, a lease is not an asset but a liability. This particular issue is one which is going to prove very vexing indeed because businesses in many cases have now accrued probably a year’s rent and they just do not have any money to pay it. It has been all very well that there has been a moratorium but this has benefitted one party only, the tenant and that temporarily only. The sector, along with other businesses in the same boat, is anticipating a plethora of landlord eviction and debt claims and at the same time it is anticipated that there may be an unprecedented number of company voluntary arrangements, “CVA”, which are very unpopular with landlords as arrears of debt can be written off if the other creditors agree. It is also highly possible that we shall see a large number of new bankruptcy petitions presented, both by creditors and debtors themselves. We have raised this issue on previous occasions because it has been a smouldering fire which is bound to leap into an inferno sooner or later. As we have said before, one man’s profit is another man’s loss and there was never a time when this was truer than when sorting out the issue of outstanding rents. The problem is simply that the rent remains payable and once the moratorium comes to an end, landlords will be free to take such recovery action as they choose. There is a strong school of thought that it would not be wise to extend the moratorium as this is merely kicking the can down the road and will make the problem a greater one once the moratorium is over. Rent arrears could now amount to thousands in some cases and it has to be possible that bankruptcies will ensue as part of the unravelling of this particular issue. A small crumb of comfort which has been received is that the chancellor is considering extending the furlough scheme although this will be little comfort to businesses which cannot fund their accommodation costs. Of course the same could become true of mortgages but there is a difference – lenders can agree to schedule an extension to a mortgage which a landlord cannot in the same way. As we advised previously if you are one of those businesses who is likely to be affected by adverse landlord action, take professional advice urgently to see what can be done to protect your position. It is always possible to mediate. Another small bright spark is the fact that the Supreme Court has backed the case that insurance companies are in many cases bound to meet claims for interruption of operation due to Covid-19. If you are one of the lucky ones here, this may be a huge relief. Adrian Leopard 21-01-20 Photo Melinda Gimpel Rate article No rating Rate this article: No rating Tags mediation hospitality hotels local pub insolvency accountancy advice bankruptcy Share Print Switch article End of an era – Mr Marmite departs for Florida Previous Article 400 people at wedding breaking the rules Next Article Comment Collapse Expand Comments (0) You don't have permission to post comments.