In the face of increased tenant bankruptcies caused by the COVID-19 pandemic, a key question arises for commercial landlords: what protection do I have from the security provided by my tenant? Tenant-supplied security under a lease can take many forms, including a third party guarantee or indemnity, prepaid rent, a cash deposit, and a letter of credit (an LOC). Crucially, certain forms of security will be more beneficial to a landlord in the face of a tenant bankruptcy, especially where the lease has been disclaimed by the tenant’s trustee in bankruptcy.

The Court of Appeal of Alberta issued the latest decision in the Companies’ Creditors Arrangement Act (CCAA) proceedings of Bellatrix Exploration Ltd. (Bellatrix).¹

Part 1

Without question, the top story over the last year has been the COVID-19 pandemic and its tremendous ongoing effects felt across Canada and the world.

This time has had a significant impact on Canada’s energy industry and many of the changes and developments that took place in 2020 will continue to influence trends, business decisions and the future growth of Canada’s energy industry in 2021.

In the recent decision in PricewaterhouseCoopers Inc. v Perpetual Energy Inc., 2021 ABCA 16 (Perpetual Energy), the Alberta Court of Appeal has reversed the Honourable Justice D.B. Nixon’s decision, striking out or summarily dismissing claims by PricewaterhouseCoopers Inc. in its capacity as trustee in bankruptcy (the Trustee) of Sequoia Resources Corp. (Perpetual/Sequoia).

This is part three of a series focusing on current M&A trends, opportunities and challenges

The COVID-19 pandemic has forced big-name brands to pursue unique strategies to secure fiscal relief.

This is the first part of a two-part series

Commercial tenant bankruptcies and COVID-19

Since the early days of the COVID-19 crisis in the U.S., it has been a recurring theme to turn on the news and see that yet another big-name retailer is rumored to be on the brink of filing, or has already filed, for bankruptcy.

Landlords are receiving a deluge of requests to provide rent relief to commercial tenants whose operations have either been closed or substantially restricted as a result of state and local governments’ COVID-19 stay-at-home orders and related restrictions. Some tenants are using the threat of a bankruptcy filing as leverage to obtain these concessions. Meanwhile, landlords are facing their own challenges with mortgage lenders and servicers as they try to service real estate loans with limited available cash.

Goulston & Storrs bankruptcy attorney Doug Rosner recently collaborated with Thomson Reuters to create a three-part video series regarding alternative solutions to the financial problems of distressed companies. This summary highlights the key elements to a successful out-of-court restructuring (part two of the series).