Shopkeepers hope for a boost in trade as rent day looms

Retailers on the edge could be forced out of business in the next few days if they can't afford to pay quarterly rent on Wednesday.

Mass shop closures are possible if strife in the sector is as bad as industry experts fear.

Deadline day is 25 March for the payment of quarterly rent, which most stores have to deliver upfront.

Even in the good times this puts a huge strain on cashflow; during a recession it is a condition that forces many shops to close.

It is likely to become clear on Wednesday that many businesses are unable to pay this rent and have potentially been trading while insolvent during the last quarter, say lawyers Wedlake Bell.

Some directors of retail businesses could even be pursued for wrongful trading, which could leave them personally liable for some of their businesses' losses. Debts to suppliers can be huge in the retail sector.

Shopkeepers probably feared for their future at the end of last year, but continued trading with the hope that business would improve, says the City law firm.

Edward Starling, head of Wedlake Bell's Rescue and Restructuring Group, says: "With consumer spending taking a nosedive during the past few months, it has become obvious that wishful and possibly naive thinking has not translated into reality for many businesses."

Leading retailers, including Sir Philip Green, have lately been pressing landlords to accept rent on a monthly basis.

Hardware retailer Robert Dyas is desperately seeking rent reductions from its property overlords.

Says Starling: "Landlords are ultimately going to be thinking pragmatically about the situation.

"With no evidence of the recession going away anytime soon, good new tenants will be harder to come by so they may be forced to accept less than ideal rent payment arrangements."