The government restrictions on enforcement options for Lenders have been regularly extended due to the ongoing pandemic. Below is a table of what options are available to Lenders as at 22 March 2021 to enforce their security and recover liabilities owing from their borrowers.
|
TYPE OF ACTION |
OPTIONS |
| Mortgage possession proceedings | Lenders are allowed to issue and pursue mortgage possession proceedings to obtain a possession order. |
| Evictions | There is a ban on residential evictions preventing enforcement of a possession order. Attendance by a bailiff at a residential property for the purpose of executing a writ or warrant of possession, or delivering a notice of eviction is banned until 31 May 2021, subject to certain limited exemptions. Current FCA guidance also prohibits regulated lenders from enforcing possession orders before 1 April 2021. |
| Residential Tenant Possession Proceedings | Possession proceedings can be commenced and pursued however the period of notice required under sections 8 and 21 of the Housing Act 1988 has been extended to six months save for in exceptional circumstances.
The same restrictions on evictions apply. |
| Receivership | Lenders may appoint receivers subject to the terms of their security. |
| Administration | Lenders may appoint administrators subject to the terms of their security. |
| Liquidation | No winding up petition may be presented on the basis of a statutory demand served after 1 March 2020 or any of the other usual grounds for proving that a company cannot pay its debts, unless the creditor has reasonable grounds to believe that:
This restriction on winding up petitions is in place until 30 June 2021 and may be further extended. |
| Bankruptcy | Statutory demands and bankruptcy petitions may be presented as usual against individual borrowers and personal guarantors.
However from 4 May 2021 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 commence and:
|
| Part A1 Moratorium | CIGA 2020 introduced the ‘Part A1 Moratorium’ into the Insolvency Act 1986, which provides a payment holiday for certain pre-moratorium debts. In respect of debts owing to Lenders:
If a borrower fails to pay pursuant to the terms of its facility, a Lender may still accelerate the debt or make a demand for repayment under an on-demand facility. |
This article is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this article may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.
