For RSLs who are routinely contracting with housebuilders for golden brick delivery of affordable housing across multiple phases, we discuss the four key actions that can help if the housebuilder becomes insolvent.

1. Pre-Insolvency – Financial Distress Provisions and Due Diligence

The first quarter of the year can often be a pinch point for tenants as they assess Christmas trading and scrutinise financial results. Where profits have failed to meet expectations then a tenant may require to consider formal insolvency proceedings but how does this affect the landlord? Here we consider some of the key questions for a landlord in Scotland facing tenant insolvency.

What is the status of the tenant?

2023 was a year where we saw buyers and sellers of commercial real estate assets not necessarily always aligned on pricing against a backdrop of lending headwinds. As the year drew to a close, visible signs of distress were reported to be emerging in certain corners of the real estate sector which may well bring fruitful opportunities in 2024 for property investors looking to acquire new assets via distressed or enforced sales. But what is a "distressed" property sale and what are the key considerations for buyers looking to acquire these types of assets?

In brief

The courts were busy in the second half of 2021 with developments in the space where insolvency law and environmental law overlap.

In Victoria, the Court of Appeal has affirmed the potential for a liquidator to be personally liable, and for there to be a prospective ground to block the disclaimer of contaminated land, where the liquidator has the benefit of a third-party indemnity for environmental exposures.¹

CVAs continued to be a popular restructuring tool in 2021. As the retail industry gears up for what is expected to be a busy festive period, it marks the end of another year in which the close scrutiny and attempted challenge by landlords to retail CVAs continued.

What is a CVA?

In brief

Australia's borders may be closed, but from the start of the pandemic, Australian courts have continued to grapple with insolvency issues from beyond our shores. Recent cases have expanded the recognition of international insolvency processes in Australia, whilst also highlighting that Australia's own insolvency regimes have application internationally.

Key takeaways

In brief

With the courts about to consider a significant and long standing controversy in the law of unfair preferences, suppliers to financially distressed companies, and liquidators, should be aware that there have been recent significant shifts in the law about getting paid in hard times.

In brief

In brief

Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator.  Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing1, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.

The resulting decisions reveal:

CVAs remain the restructuring tool of choice for businesses with multi-let properties. Since the start of the first UK lockdown, there has been a marked increase in the number of CVAs in the hospitality and retail sectors. Whilst vaccines are now being dispensed, the economic ramifications of the pandemic will persist for some time to come and as a result we expect to see many more CVAs being proposed, particularly in these sectors. The introduction of R3's Standard Form COVID-19 CVA Proposal could lead to an increase in the use of CVAs in the SME market too.