The UK Government passed legislation to increase transparency surrounding overseas entities owning UK real estate, something first announced as a possibility in 2016 by then Prime Minister David Cameron.

The UK Government’s Levelling Up White Paper outlines plans relating to the private rental sector that promise to significantly disrupt that market. 

The NPL Directive is designed to address the high levels of non-performing loans held by banks in the European Union and to regulate the secondary NPL market. 

The government has announced that leaseholders in buildings between 11 and 18 metres (36-60ft) tall will no longer have to take out loans to cover costs to repair unsafe cladding. Instead, developers will be expected to cover the costs, estimated at £4bn. However, questions remain.

Effective 1 June 2021, the minimum notice periods for most possession notices served between 1 June 2021 and 30 September 2021 (inclusive) have been reduced from 6 months to 4 months. Further changes to Section 8 notice periods (on the grounds of rent arrears) will take effect from 1 August 2021. Subject to public health advice, notice periods are scheduled to revert to pre-COVID levels effective 1 October 2021. In addition, the temporary eviction ban in England ended on 31 May 2021. The following is a summary of the changes which apply (England only) from 1 June 2021: Section 21 The notice period for serving a Section 21 notice has been reduced from 6 months to 4 months. A new prescribed form must be used. The period by which possession proceedings can be commenced will also be reduced, from 10 to 8 months from the date on which the Section 21 notice was given. Section 8 Generally, where the current notice period was 6 months, the notice period has been reduced to 4 months. A new prescribed form must be used. Exceptions remain for notices served on the grounds of anti-social behaviour and domestic abuse. When the grounds for eviction relate to rent arrears, the death of a tenant or there has been a breach of the ‘Right to Rent’ rules, the situation is more complex. Rent Arrears: In the case of “ Serious Rent Arrears ” (at least 4 months’ rent unpaid), landlords will have to give at least 4 weeks’ notice; In the case of “ Non-Serious Rent Arrears ” (less than 4 months’ rent unpaid) landlords will have to give: (i) at least 4 months’ notice from 1 June 2021 through 31 July 2021; and (ii) at least 2 months’ notice from 1 August 2021. Death of a Tenant: In order to serve a Section 8 notice on the grounds of a tenant’s death, a landlord must give at least 2 months’ notice. Right to Rent: In order to serve a Section 8 notice on the grounds of immigration status, a landlord must give at least 2 weeks’ notice. If a landlord recently served an eviction notice prior to the above notice periods being reduced, he or she may wish to consider serving it again (with the new prescribed form) in order to benefit from the reduced notice periods now available. Richard Spooner is the founder of Diaconate Advisors, which offers a Fractional General Counsel suite of services for businesses, providing access to an attorney and business partner who knows and understands your business and is part of your management team.

Eviction notices cannot be served on residential tenants from 22 February 2021 until 31 March 2021 unless an exemption applies. Similarly, bailiffs cannot execute warrants of possession of land for the same period. The exemptions remain unchanged from previous legislation and consist of the following: eviction of occupants where ‘substantial’ rent arrears have accrued (minimum 6 months’ rent arrears); eviction of trespassers; eviction of occupants on the grounds of anti-social behaviour; eviction of occupants on the grounds of nuisance or false statements; and taking possession where a property is unoccupied following a tenant’s death. Court proceedings to obtain a possession order are in session; however, no evictions can be enforced until April 2021 unless one or more of the above exemptions applies. Richard Spooner is the founder of Diaconate Advisors, which offers a Fractional General Counsel suite of services for businesses, providing access to an attorney and business partner who knows and understands your business and is part of your management team.

CVA’s A Company Voluntary Arrangement (“ CVA ”) is an informal (but binding) agreement between a company and its unsecured creditors pursuant to which the company’s debts are compromised. A CVA supplements (or can be used to avoid) insolvency procedures like administration or liquidation and is approved if 75 per cent (by debt value) of the creditors who vote agree. A CVA can be challenged by a creditor on grounds of unfair prejudice or material irregularity. Retailers that have undergone CVA processes include House of Fraser, New Look and Toys R Us. Some CVAs in the retail and hospitality sectors have focused on the tenants’ obligations to their landlords and often included rental discounts and moratoriums. These CVAs tended not to affect the tenants’ obligations to other unsecured creditors. However, in response to the additional impact of COVID on their businesses’ already struggling operations, CVA’s have also been pursued by tenants seeking to compromise the claims of categories of unsecured creditors in addition to landlords. These additional unsecured creditors include HMRC, employees and some suppliers. The level of the amendments and concessions sought to a lease often correlate to the particular store’s profitability. Landlords have in some cases been pressured to accept significant rental concessions. Additional concessions may be sought as a necessary measure in light of the material adverse impact the COVID pandemic has had on these businesses’ operations. Two High Court decisions somewhat reinforced landlords’ negotiating hands during the CVA process, setting some limits on what can be forced upon them: In Re Instant Cash Loans Ltd [2019] EWHC 2795 (Ch) , the High Court held that a scheme of arrangement cannot compel a landlord to accept a surrender of a lease. The court held that a landlord’s right to forfeiture is a proprietary interest and that imposing a surrender of lease provision in a scheme of arrangement was outside the scope of Part 26 of the Companies Act. (Importantly, the court ruled that there was no material difference between a scheme of arrangement and a CVA.) It was the landlord’s decision whether it would accept a lease surrender, particularly given that doing so could lead to the landlord being liable for business rates and other liabilities. In Debenhams Retail Limited [2019] EWHC 2441 (Ch) , a number of principles underlying ‘landlord-only’ CVA’s were upheld (including that future rents can be included in a CVA and that rent reductions were not automatically unfair or prejudicial, particularly if they did not reduce rental levels below the market rate). However, the High Court ruled that a CVA cannot vary a landlord’s right to re-enter its premises, as the right constitutes a proprietary right, strengthening landlords’ negotiating positions during CVA processes. CVA’s have remained prevalent despite coming under some criticism as failing to actually address some of the systemic and structural issues impacting the businesses, such as the trend away from the high street and towards on-line shopping. In addition, the management team remains in control following a CVA, which itself can be a barrier to turning around a business’s fortunes. It is perhaps because of these reasons that a significant proportion of retail-sector CVA’s have been unsuccessful. Corporate Insolvency and Governance Act 2020 (CIGA) The Government passed the Corporate Insolvency and Governance Act 2020 (CIGA) to provide additional options to rescue companies in financial distress. New restructuring processes for companies under CIGA include restructuring plans and a standalone moratorium. CIGA restructuring plans can be compared to a U.S. Chapter 11 bankruptcy; however, in practice may prove similar in effect to a CVA. The standalone moratorium (intended for businesses that can be returned to going concern status) provides for a temporary stay on enforcement action by creditors, including landlords. Some restructuring practitioners expect that many moratoriums will be followed by either (i) a CVA, scheme of arrangement or restructuring plan or (ii) an insolvency process. As commercial landlords are prohibited from serving statutory demands or presenting winding up petitions before the end of the year, there has been little need for tenants to avail themselves of the protections of a moratorium under CIGA; however, the impact of CIGA has the potential to be wide-reaching and to have a significant impact on the UK restructuring market. Return of the ‘Crown Preference’ Another upcoming legislative change may undermine CIGA, make it more difficult to raise capital for businesses being restructured, and spur certain parties to take action. On 1 December 2020, a change in a law will take effect making HMRC a secondary preferential creditor in respect to certain taxes, enabling it to collect certain debts before floating charge and unsecured creditors (a position known as the “ Crown Preference ”). The relevant taxes which will rank as a preferential debt are limited to tax collected on behalf of HMRC such as VAT, PAYE, and NIC; corporation tax will continue to rank as an unsecured (non-preferential) claims. The change is significant, particularly as floating charge holders were already impacted by the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020, which came into force on 6 April 2020, and which increased the maximum amount of the ‘prescribed part’ – the monetary amount set aside for the benefit of unsecured creditors out of the floating charge realisations – from £600,000 to £800,000. Floating charge funding is an important tool in business restructurings, and the recent changes with respect to the prescribed part and the Crown Preference may make it harder for businesses to access rescue finance. Lenders may insist on taking more fixed charge security or require personal guarantees. Some lenders may be pressed to take action in advance of the Crown Preference coming into effect. That would not have been the Government’s intention. Richard Spooner is the founder of Diaconate Advisors, which offers a Fractional General Counsel suite of services for businesses, providing access to an attorney and business partner who knows and understands your business and is part of your management team.

The scope and influence of general counsel can be significant, affording access to key decision makers and a seat at the table where important business and strategic decisions are made. Perhaps unsurprisingly, a general counsel position is a professional aspiration for many attorneys, either as a destination in its own right or as a foundation for a future executive or non-executive management role. The following is a sampling of some abilities of effective general counsel, and areas a lawyer seeking to move into a general counsel seat may wish to give particular focus. Understand the business . When a general counsel truly knows and understands a business, he or she will perform better as both a legal and a business advisor. Having significant legal experience in its specific industry is therefore often a prerequisite when a company is looking to identify its general counsel. A general counsel must strive to understand the evolving priorities of the business and how the legal department can help the business achieve its objectives. That understanding may be best cultivated in relevant in-house roles, which will require an attorney to adopt a different approach than when operating in a law firm and to interact with a myriad of different groups and individuals in a corporate environment. Develop a breadth of experience . While specific industry knowledge is undoubtedly important, a general counsel will be expected to manage matters touching on a wide swath of areas, including corporate law, regulatory compliance, data protection, labour and employment, and litigation. In some businesses, knowledge of intellectual property and copyright laws may be also be valued, as may be experience with mergers and acquisitions or competition law. If one’s day-to-day role does not afford opportunities to develop expertise in these areas, volunteering for a complex project or initiative, potentially one involving a myriad of different disciplines and departments, may be an option, as may be seeking out external training. A general counsel may also need to have experience operating across multiple jurisdictions; therefore, having worked abroad may be beneficial, particularly for a general counsel of a multinational organisation. Of course, it is not realistic to be an expert in everything, and a general counsel will often need to rely on external experts, either from a subject-matter or local-law perspective. But sound judgment and decision-making ability (often on the basis of limited information and under tight deadlines) are defining characteristics of an effective general counsel. Demonstrate business acumen . Any general counsel should be prepared to demonstrate that they bring more to the table than just strong legal skills. A lawyer seeking a general counsel position should ensure they have a grasp of finance and accounting concepts and know how to read balance sheets and profit and loss statements. General counsel will often be expected to manage the budget of the legal group, so knowledge of budgeting and forecasting is essential, as is an understanding of resource allocation and return-on-investment. Team-building and leadership skills are also critical, including an ability to select, manage, and develop internal resources in a global environment. Build relationships . As a member of the senior management team, it is essential that a general counsel establish credibility with a myriad of different internal and external stakeholders and business leaders. A general counsel must be able to communicate effectively to both large and small audiences. The general counsel must collaborate effectively with leaders of other functions such as finance, human resources, information technology, marketing, and sales, as well as with the CEO and the board of directors. Those interactions may involve mundane matters, but invariably the general counsel will also be turned to in times of crisis. General counsel should focus on communicating key points, risks, and considerations as clearly and plainly as possible to better assist the management team or senior executive who is consuming that advice. A general counsel who identifies and articulates risks clearly, thinks strategically, and ultimately crafts creative solutions that mitigate risks in a way that advances the business, should help ensure they are seen as a valuable member of the executive team. In summary, an effective general counsel needs to bring more than just specific legal expertise. A company will also expect its general counsel to be a strategic thinker and effective communicator, possess broad business experience and financial acumen, and be able to build relationships across a diverse group of internal and external stakeholders. Richard Spooner is the founder of Diaconate Advisors, which offers a Fractional General Counsel suite of services for businesses, providing access to an attorney and business partner who knows and understands your business and is part of your management team.