Since the beginning of the COVID-19 pandemic, insolvent companies have sought court intervention relating to the payment of rent during lockdown periods. In the most recent decision on this issue, the Quebec Superior Court (Court) ruled that a debtor undergoing a restructuring under the Companies’ Creditors Arrangement Act (Canada) (CCAA) should not be relieved of its obligation to pay post-filing rent, even in circumstances where its ability to use the leased premises is constrained by governmental orders.

We all know 2020 made an impact – and as we look at the year ahead, there are a few repercussions of the incredible strain placed on businesses that are likely to come into the limelight as a result. While there are some global trends in litigation – like litigation funding and class actions - some Scotland specific trends are also worth highlighting. With that in mind, here are the five key things for litigators to watch in the year ahead:

1) Frustration and leases in Scots law

I have obviously been a good boy this year because my gift from the Insolvency Service has arrived - the November 2020 Insolvency statistics. And like any properly brought up child, I decided to sneak a peek at my present before Christmas Day.

What the numbers show us is a continuation of the trend that the previous figures disclosed - corporate insolvencies remain markedly lower than the equivalent period last year. In Scotland in particular this is driven by a massive reduction in the number of compulsory liquidations this year (Nov 2019 - 56; Nov 2020 - 13).

Dans une décision récente, la Cour d’appel de l’Ontario (la « Cour d’appel ») a infirmé une décision de première instance, laquelle avait été source de préoccupation pour les propriétaires commerciaux qui ont comme pratique courante d’utiliser des lettres de crédit pour garantir les obligations prévues à leurs baux commerciaux.

In a recent decision, the Ontario Court of Appeal (Ontario Appeal Court) reversed a lower court decision, which had created much concern among commercial landlords that routinely rely on letters of credit (LCs) to secure their commercial leases. The lower court limited the draw on an LC to the landlord’s preferred claim under the Bankruptcy and Insolvency Act (BIA), namely three months’ arrears and three months’ accelerated rent.

Earlier this year the UK Government introduced a number of temporary measures intended to avoid large scale insolvencies across the country. One of these measures was the suspension of wrongful trading liability.

This suspension was in place until September 30, 2020. Most of the other temporary measures were extended (e.g. the effective suspension of winding up petitions by creditors has been extended until December 31, 2020) but the suspension of wrongful trading liability was not extended.

The Ontario Superior Court of Justice (Canadian Court) recently recognized, for the first time, an English company voluntary arrangement (CVA) proceeding commenced pursuant to the UK Insolvency Act 1986 (Insolvency Act).

Where a company becomes insolvent, there is a considerable risk that its employees end up being both out of a job and out of pocket. With the news that Arcadia Group has fallen into administration this week, we explore where employees stand when they are owed money from their insolvent employer and what steps they can take to maximise the chance of recovering sums.

A floating charge will usually set out the rights exercisable by the floating charge holder after the point at which that floating charge has become "enforceable".  The floating charge might also contain language clarifying when the charge is deemed to be enforceable - typically after the occurrence of an event of default set out in the underlying facility agreement which is secured by that charge

The Insolvency Service has released the latest insolvency statistics (to September 2020). 

These figures are particularly interesting as they shed light on the effects of the various changes to the insolvency landscape that have occurred since Covid-19 started to affect the economy.

Since March 2020, we have seen the introduction of the Corporate Insolvency & Governance Act ("CIGA"), Government schemes and lockdowns of various sizes, shapes and geographical restrictions.