Landlord launches legal action against hospitality tenants over unpaid rent

By James McAllister

- Last updated on GMT

Landlord Criterion Capital launches legal action against hospitality tenants Five Guys and Caffe Concerto over unpaid rent Coronavirus lockdown

Related tags lockdown Coronavirus Landlord Rent arrears

Burger brand Five Guys and café chain Caffe Concerto are both facing legal action over unpaid rent after one of their landlords filed respective county court claims against each operator.

Court documents seen by The Mail on Sunday​ show Criterion Capital has filed a £1.5m claim to recover rent from Five Guys, and a £284,000 claim against Caffe Concerto.

It has also filed a seven-figure claim to recover rent owed from a third hospitality firm, which asked not to be named. 

All three of Criterion Capital's legal claims have been made since June last year when the Government published its 'code of practise' for commercial rent negotiations.

The voluntary code, which has anecdotally been met with derision by numerous business owners in the hospitality sector, states that firms unable to pay their rent in full should 'communicate with their landlord and pay what they can', and landlords 'should also provide support to businesses if they are able to do so'. 

Many hospitality firms have not paid any rent in nearly a year as a result of the impact to trade caused by Coronavirus pandemic.

Protections are currently in place temporarily restrict landlords from pursuing aggressive forms of rent recovery such as statutory demands and winding-up petitions, but are set to expire at the end of March alongside the lease forfeiture moratorium, which was introduced in March last year and prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic.

Caffe Concerto director Stephano Borjak said Criterion's behaviour amounted to 'harassment' while the moratorium is in place. 

He told The Mail on Sunday​: "We have paid our rent in full and on time for 12 years. But now we have only been allowed to open for three months since last year, our landlord issues a county court order against us. It is completely unacceptable."

Fears are growing that the end of the lease forfeiture moratorium could lead to a bloodbath of business failures across the sector.

A recent study carried out by commercial property restructuring specialist Cedar Dean revealed that 77% of hospitality operators are currently being forced to look at restructuring or insolvency options, with current rents remaining unaffordable for the vast majority of businesses.

Only 31% of businesses have successfully agreed new terms with the majority of their landlords, with 73% saying they won’t survive the next six months without further support from the Government or their landlord.

To read BigHospitality​'s in-depth analysis of what will happen when the lease forfeiture moratorium expires, click here​.

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