UPDATE #3 FROM THE RHTLAW CRISIS RESPONSETEAM:
The amendments of the Response Act are temporary and will apply for six months until September 23, 2020. However, subject to economic and health developments, the provisions may be expanded in both their application and scope
Download this guide for commercial landlords from our property and insolvency team. This handy table sets out the enforcement options potentially available following the government’s emergency measures to combat COVID-19 whether or not the defaulting tenant has entered a formal UK insolvency procedure.
Landlord’s remedies on default by an insolvent commercial tenant
The UK government has announced amendments to certain aspects of insolvency law, designed to enable businesses which have been adversely affected by the coronavirus outbreak to continue trading while they explore options for rescue or to restructure.
The U.K. government has announced a series of measures intended to support businesses impacted by coronavirus/COVID-19, including suspension of the wrongful trading regime, a job-retention scheme and a temporary ban on the eviction of commercial tenants.
Suspension of Wrongful Trading Regime
On 28 March 2020, the Business Secretary, Alok Sharma, announced new insolvency measures to support companies under pressure as a result of the COVID-19 outbreak. In summary, the government is due to: (i) implement the landmark changes to the corporate insolvency regime that were announced in August 2018 (as discussed in Weil’s European Restructuring Watch update on 7 September 2018); and (ii) temporarily and retrospectively suspend wrongful trading provisions for three months.
Proposed Changes to the Corporate Insolvency Regime
The novel coronavirus COVID-19 pandemic has the potential to impact the U.S. economy at a level which could ultimately rival or surpass the global financial crisis of 2009. Reports from commercial landlords suggest that a majority of retail and restaurant tenants, perhaps as many as 75%, failed to make payments of rent due on April 1st.
The Australian Federal Court has made orders relieving the administrators of retailer Colette from personal liability for rent in response to the COVID-19 crisis and the current uncertainty in respect of government policy about rent relief for tenants: see
What you need to know
Restructuring and insolvency professionals are showing real ingenuity when restructuring insolvent businesses, and landlords need to keep up.
Economic downturns create opportunities for the restructuring or acquisition of challenged assets, and we anticipate increased activity in this space in 2023. The indicators pointing in that direction are:
Can a corporate debtor be denied a Subchapter V discharge under § 523(a), despite this § 523(a) language (emphasis added):
- “A discharge under section . . . 1192 [Subchapter V] . . . does not discharge an individual debtor from . . . ”?
A recent Bankruptcy Court opinion (in Avion Funding) says, essentially, this: “No! You can’t paint over explicit statutory language.”[Fn. 1]
Such recent opinion: