Written ByRobert Moore
Marketing Manager
Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.
Businesses had difficulties paying their rent to landlords during the Covid-19 pandemic as a result of the recession, enforced lockdowns and business closure notices.
Legislation had been enacted that stopped landlords forfeiting leases, issuing petitions or statutory demands where rent has not been paid due to Coronavirus. This protection has now expired as of the 25th March 2022. The government has now passed the Commercial Rent (Coronavirus) Act 2022 which in effect removes all restrictions on landlords to recover their rent arrears. However, companies that were forced to close due to the pandemic ie restaurants, pubs and gyms were eligible to enter into a legally binding arbitration process where they had not been able to reach agreement. This eligibility ended on the 24th September 2022. This measure was aimed at resolving disputes about certain pandemic-related rent debt as quickly as possible.
The first thing the tenant must do is contact their landlord and be open and honest about the situation. Inform them the inability to pay the commercial rent due to a lack of supporting cash flow.
Before claiming unpaid rent from a commercial tenant, the landlord must remember the following:
Once they have found an authorised enforcement agent, they will need to fill out a Warrant of Control form to enable them to begin enforcement action. The enforcement agent will then take over the process, issuing a seven day notice to your tenant in the first instance.
If the rent remains unpaid at the time of enforcement, the agent will enter the property and take control of certain goods located thereon to be sold at public auction.
In essence, if the company cannot pay its debts as and when they are due, then it is insolvent. This means directors must look at and assess the options available to them:
We have lots of experience in negotiating with landlords so do not delay and give us a call if you are at all worried.
Hadden Construction Goes Into Administration
Hadden Construction, the Perthshire housebuilder established in 1992, has gone into administration with the loss of 66 Jobs.Work on active sites including supported living apartment developments and affordable homes will stop depending on an evaluation of ongoing projects.This week joint administrators Ben Cairns and Jonny Marston from Alvarez & Marsal were appointed to "wind down" company operations.The failure of the company was blamed on rising materials costs and an increase in labour rates.Mr. Cairns said: "Like other contractors, Hadden Construction has been battling a number of headwinds in recent years, including inflated materials prices, rising labour costs and supply chain interruptions.“As administrators, we will seek an orderly wind down of the operations and will welcome any investor interest in the company’s assets.”Mr Cairns added: “We understand that today’s news is unsettling for the company’s employees and will be doing all we can to support them over the weeks ahead.”With a turnover of £30.2 million, the most recent figures for the company for the year ended March 31 2023 show a pre-tax profit of £260,503.Hadden was appointed by the Scottish Procurement Alliance to its £100 million Refurbishment and Modernisation (RM3) Framework in March of this year. Apart from several other public sector frameworks including Scotland Excel's New Build Residential Framework, Wheatley Group, Link Group, Hub East Central, Hub South East and The City of Edinburgh Council, Hadden was already appointed to SPA's Public Buildings and Infrastructure (PB3) Framework and New Build Housing Construction (H2).In addition, it was preparing to replace 20 chalets on a permanent Gipsy Traveller site near Perth, the company signed a £1.9m design and construct contract in April to deliver 10 reasonably priced homes for rent in Newtyle for Abertay Housing Association.Elsewhere, Hadden had worked on a £6.25 million renovation at the Muirhead House student residence at the University of Stirling.The construction industry has the highest insolvency rate when compared to other industries. This is due to a number of factors.Below are some of the common problems we’ve seen happen in the industry: Contract arguments and QS problems. Bad debts. Delays in repayments from HMRC, regarding CIS deductions (which are connected to PAYE scheme). HMRC can be slow in making CIS refunds, leading to issues with cash flow. Time to pay deals with HMRC for PAYE and VAT (where applicable) being too expensive for your cashflow. Losses made on large contracts, where large clients or main contractors slow down payments and sometimes go into administration. Hitting YOUR cashflow. So called “subby bashing”. Issues with sub-contractor non performance or slow completions. Difficult customers, be they private individuals, clients or contractors – who add extra work on and won’t pay extra! Lengthy contracts with material prices agreed at beginning. I.e. quotes do not keep up with rising costs. Especially tough after huge price rises in recent years. Less focus on financial accounts, financial management due to directors and management being onsite. Hard to win new contracts if cash flow is tight, perhaps due to low credit rating. Retention sums not released at agreed times. Suppliers taking legal actions such as County Court Judgments, or even issuing winding up petitions.
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