Statutory Demands

IMPORTANT CHANGE CONCERNING STATUTORY DEMANDS AND PARTICULARLY THE IMPACT ON COMMERCIAL LANDLORDS

On 1st October 2015 the level of debt that would permit the service of a valid Statutory Demand as a preamble to bankruptcy has increased from £750 to £5,000. Whilst in general terms bankruptcy is rarely a successful means of enforcement, the threat of such proceedings frequently result in payment either in full or on agreed terms.

This will have an impact, not only on creditors in general but, in particular, on commercial landlords.

Commercial landlords should now consider alternate enforcement methods for recovering rent which may possibly require utilising the new Commercial Rent Arrears Recovery Scheme. Importantly, commercial landlords should at the outset consider obtaining a Rent Deposit Deed executed by the tenant. This would ensure a deposit (say £5,000) is lodged against future default in rent or possibly other breaches of clauses and covenants within the Lease. This prudent practical step, with the execution of a form of Deed, should be an effective barrier against competing creditor claims in the event of a default.

This change must also be borne in mind when considering the financial suitability of any proposed assignee to an existing Lease.

For details on recovery of rent and debts generally, please contact a member of our Litigation Department.

For details on Rent Deposit Deeds or commercial leases, please contact Guy Watson or Matt Rimmer.