Historically, the interests of landlords whose commercial real estate is occupied by debtors in Chapter 11 proceedings have been generally well protected. Indeed, Section 365(d)(3) of the Bankruptcy Code requires the debtor to timely perform all of its post-petition obligations under its nonresidential leases of real property — most important among those, rent.
Court closures
India was in complete lockdown from 24 March until 31 May, a situation that inevitably impacted the functioning of Indian courts. Even though most implemented measures to conduct virtual hearings, these hearings have been limited to only the most urgent cases. Once courts return to business as usual, they are likely to receive a surge in filings, which will increase the backlog in a country that already has 30 million pending cases.
As COVID-19 spread across the globe like wild fire, many of its effects—including an economic downturn and emerging disputes risks—are being felt across markets.
The German parliament has adopted new legislation yesterday which is expected to become law soon. This briefing summarises the changes made, as well as a number of other legal aspects we find noteworthy in current times with regard to the real estate sector.
On 25 March 2020, the German Parliament (Bundestag) passed, in connection with the COVID-19 pandemic, significant changes in law (the “New Law”). These changes are subject to approval by the Federal Council (Bundesrat), which, however, is expected to be granted soon.
On July 9, 2012, Judge Mary F. Walrath of the Bankruptcy Court for the District of Delaware disallowed a claim for rejection damages related to a real estate development agreement, because the claim had been released upon the termination of an LLC Agreement, and the underlying ground lease never came into existence. In re Magna Entm’t Corp., 2012 Bankr. LEXIS 3089 (Bankr. D. Del. July 9, 2012).
Background
Introduction
Both COVID-19 itself and the severe financial impact the virus and associated lockdown has had on the UK economy, have led not only to a large number of UK businesses re-examining the contractual terms on which they do business but also to a spike in disputes. Some matters which have been prominent in current disputes, and which are therefore key considerations for business both in looking at their existing contracts and planning for the future, include the following: • What termination provisions do they have in their contracts?
Whether or not the impact of the COVID-19 crisis on a party’s ability to perform its obligations will constitute a force majeure event enabling them to claim relief depends on the terms of the contract as applied to the precise circumstances. Where there is no force majeure clause, a party may in rare circumstances be able to invoke the doctrine of frustration.
The COVID-19 pandemic created unprecedented disruptions across the global economy, perhaps most severely in the retail sector. Shelter-in-place orders, government-mandated closures and other restrictions drastically reduced or entirely wiped out revenue streams, resulting in an increased number of bankruptcy filings by retail debtors.
The outbreak of coronavirus COVID-19 represents one of the most significant global public health crises in recent memory and is causing major disruption and unprecedented volatility in markets, economies and businesses. With such great social and economic uncertainty, it is inevitable that existing financial arrangements will be affected and asset-based lenders (ABLs) are not immune to this. They are, however, uniquely positioned – given the flexibility of the products they offer – to react to the ever-changing economic landscape.