The majority of the building and engineering contracts that we encounter (and draft) require some form of performance security from the contractor, whether this is a parent company performance guarantee granted by the contractor's ultimate holding company, or a performance bond granted by a third party surety or a bank for a capped sum. Indeed most, if not all, standard form contracts provide for these forms of security, even if only as an option.
Many commercial landlords are increasingly alarmed that COVID-19 may cause a surge in tenant bankruptcies or restructurings. We outline below the major issues for landlords arising from tenant defaults and insolvencies and suggest best practices to minimize losses.
Many commercial landlords are increasingly alarmed that COVID-19 may cause a surge in tenant bankruptcies or restructurings. We outline below the major issues for landlords arising from tenant defaults and insolvencies and suggest best practices to minimize losses.
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.
The Ontario Court of Appeal (the “Court of Appeal”) released its decision in 7636156 Canada Inc. (Re), 2020 ONCA 681 on October 28, 2020. The Court of Appeal clarified the law regarding a landlord’s entitlement to draw on a letter of credit where the underlying lease has been disclaimed by a trustee. Overturning the lower court decision, the Court of Appeal held the landlord was entitled draw down on the entire principal of the letter of credit pursuant to its terms and the terms of the disclaimed lease between the parties.
Businesses and individuals increasingly own assets in multiple jurisdictions. As an insolvency practitioner (or office holder), the chances of being appointed over an estate with assets located outside the UK are greater now than they ever have been.
Significant changes will come into force after 31 December if no agreement is reached (or is not finalised and ratified) before the end of the transition period for cross-border insolvency proceedings. Importantly, the changes will alter the grounds for jurisdiction to open insolvency proceedings in the UK and impact the recognition of those UK insolvency proceedings in the EU.
The question of whether or not a trustee in bankruptcy can sell a family home to help recover the debts of an individual varies on a case-by-case basis. The law in Scotland provides protection to a debtor's immediate family, but permission can still be granted to sell the property – if five factors are considered first.
The Corporate Insolvency and Governance Act 2020 ("CIGA") came into force on 26 June 2020 with the main objective of giving businesses "breathing space" in order to continue trading in light of the COVID-19 pandemic. It was progressed quickly through parliament and includes a number of temporary measures aimed at immediately reducing the number of companies entering insolvency procedures.
In its recent decision in Chandos Construction Ltd. v Deloitte Restructuring Inc., the Supreme Court of Canada (the “SCC”) affirmed the place of the ‘anti-deprivation rule’ in Canadian common law and provided guidance on its application.[1] This rule invalidates contractual terms that would remove value from a debtor’s estate and reduce the assets available for distribution amongst creditors.