Who does this apply to:

Business Owners who operate under a commercial tenancy or lease, and through no fault of their own are not able to break even or have overwhelming debts following the effects of the pandemic.



The business now has a risk and reward profile that is unbalanced and far removed from the original business plan and investment entered into by the parties.

Changes in trade and consumer habits which have for some become entrenched and long term (no swift return to normal) mean there is no longer any reward and staying open simply adds more risk via business debt. Sometimes this is exacerbated by the short length of a lease or tenancy agreement. Without grants of write-offs, the business will never be able to pay its way out of this situation.

One of the most acute situations businesses in crisis need to avoid getting into in a post-pandemic world is one whereby the business owner bends over backward to clear debts and build back sales only to have the property owner end the agreement at the breakpoint or by using an existing forfeiture clause. The business owner runs the risk of locking in no reward for years to come and is simply working to pay off unplanned debts to the landlord or bank which was never the intention of the business.

Businesses run a huge risk of sleepwalking into this problem and end up as zombie companies or businesses. That is to say, no one is bringing the situation to a close, so it carries on unable to make a profit or return for the owners. The capital and labour are increasingly tied up in performing a pointless operation of debt repayment / deleverage which could carry on for years to come. Risk and reward are not balanced and, unable to be balanced unless there is huge write-off, insurance pay-outs or new waves of grant support.

The standoff businesses face could be ended by one of three parties acting:

  1. Business tenant
  2. Property owning Landlord (either lease end or forfeiture)
  3. Third-Party (i.e. HMRC / Council / Supplier / Utilities / Bank)

Only one is in your control.

The others could pull the plug, but for many reasons choose not to, usually because it will crystalise their losses as well and when facing their own crisis prefer to stand back and watch. Be careful not to spend years paying off debt only to have the plug pulled, focus on ensuring that any plan you follow gives you a reward.

Landlords are clearly not compelled to enter non-contractual processes not outlined in the lease; they could simply hold you to the terms you signed up to. If they are going to take a hard-line approach and refuse to share in the effects of the pandemic, you need to know asap, or will face racking up more debts waiting to learn about their intentions.


What alternative options exist?


Fate, you can take your chances and wait and see if your landlord simply forgives you the rent you owe them and or waives any rights to forfeit your agreement. This is usually how firms end up trading on as zombie companies.

Closure, agree on a formal surrender, if you are considering abandoning the premises without agreement do note that this might not stop the debts from accruing. It is advisable to try and get a surrender agreed.

Take insolvency action in the courts to ringfence debts – if you enter an IVA or CVA you should note the Insolvency can affect lease rights or other commercial relationships you hold i.e. with your bank or suppliers. Insolvency is expensive and inflexible, (say) the situation changes for the better you cannot change the arrangement and are stuck with it for the duration.

Consider a different form of arbitrationfor example, the Chartered Institute of Arbitrators offers a fixed fee service for parties under its Pandemic Business Dispute Resolution Service.

Consider a one-off full and final settlement (i.e., a lump sum offer – may not be affordable).

Make a “family arrangement” or propose a debt plan to your landlord including any other creditors that you owe money (these are flexible, affordable plans and low cost to set up). These can provide breathing space and leave you free to change your mind and try something else later. See


Contact trade-specific charities to access any benevolent funds/grants.


They can help with moving costs, deposits, retraining, and paying for bankruptcy.

Licensed Trade Charity (pubs etc):

Hospitality Action:

Retail Trade Charity:

Further support can be found here:


Live on-site

For those who live “above” the business or on-site, if you have nowhere to live when the business ends then you should contact your local council and apply to the homelessness unit.

Take advice before going bankrupt especially if you are doing it before securing any new housing, the effect of bankruptcy could be seen by the council as you are making yourself intentionally homeless. Bankruptcy can always wait until after your housing situation is secure.

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