Challenges to apparently prejudicial CVAs remain fraught with uncertainty but could provide a means of negotiating more favourable terms

An eagerly awaited appeal of the high-profile case of Lazari Properties 2 Ltd & others v New Look Retailers Ltd & others has settled, leaving landlords and tenants with no further clarity on aspects of company voluntary arrangements (CVAs), an increasingly litigious area in real estate disputes.

In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.