New bill to protect bars from “aggressive” debt collection


The UK government has introduced new insolvency legislation to help businesses, such as bars and restaurants, avoid ‘aggressive’ debt collection and to prevent them from going bankrupt due to the Covid-19 pandemic .

UK retail has been forced to close due to the Covid-19 pandemic

The Corporate Governance and Insolvency Bill was introduced on Wednesday May 20 and is designed to help companies restructure their debt and continue to operate during the pandemic.

Alok Sharma, UK Business Secretary, said: “This is a particularly difficult time for businesses across the UK and we are doing all we can to support them during this time.

“Our proposals have been widely welcomed by business groups. The bill will help businesses that were trading successfully before the Covid-19 emergency to protect jobs and put them in the best possible position to bounce back.

Measures outlined in the bill include the temporary suspension of illicit trading provisions until at least the end of June, meaning directors can continue to trade during the pandemic without risk of personal liability.

Illegal trading is an offense for a business to continue trading while knowing that a business will not be able to avoid liquidation. Its purpose is to protect trade creditors, such as suppliers, from victims of businesses that will not be able to continue operating.

The measure will suspend the use of written requests from creditors to pay a debt where the debt was caused by coronavirus.

The bill also includes a moratorium on liquidation orders, with owners and investors encouraged to work with businesses, such as those in the hospitality industry, that are unable to pay their bills while the pandemic continues.

Horeca welcomes insolvency bill

Trade body UK Hospitality said the bill was important legislation.

Kate Nicholls, chief executive of UK Hospitality, said: “The bill should give businesses a very welcome respite from aggressive landlords and valuable respite to restructure their businesses.

“It is very encouraging to see the government listening to the concerns of tenants and landlords and acting decisively on what is a complex issue.

“The majority of owners have been cooperative, but a minority have aggressively sued hotel businesses that are mothballed, have no income and cannot hope to pay. It is also positive to see the protection extended to landlords to ensure they are not forced to sue tenants.

Nicholls also stressed that extending the moratorium would give businesses and government more time to understand “the scale of the crisis” in order to start crafting longer-term solutions.

“The bill’s measures will provide more breathing room to provide rental solutions with lower rent liabilities through mandated agreements,” Nicholls added.


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