EDITORIAL by John Kimbell QC

Welcome to the first edition of Aviation News!

These are challenging and uncertain times for the aviation world. Covid-19 has temporarily grounded large numbers of commercial aircraft and rumours of airline insolvency abound as pictures of empty airports regularly appear in the press. Against this background, Thomas Macey-Dare QC considers the impact of airline insolvency on slot allocation and Mark Stiggelbout and Emily McWilliams discuss the potential impact of force majeure and frustration arguments based on the pandemic.

1. Incorporation, corporate power, capacity and authorization of an Italian company

In connection with the capacity and authorization of an Italian company to enter into ISDA or GMRA master agreements, a Italian lawyer must check and control the copies of the accessible and public records of the company, the Registration Statement, the Company Statute and the Company bylaws, with regard to the prospective negotiation of any new Master netting Agreement.

This examination of available documentation is necessary and opportune in order to verify

Bankruptcy presents challenges for both landlords and tenants. However, tenants are often better protected during a bankruptcy case. And as some of the first big bankruptcy cases in the COVID-19 era show, protections for tenants could be expanding.

Tenants in bankruptcy have the following shields from lease obligations:

Forgiveness from termination provisions

Termination provisions in a lease cannot be enforced once tenants file for bankruptcy.

Freedom to assume and assign the lease

The ongoing COVID-19 pandemic has raised pressing questions about how a force majeure provision in a lease will affect a tenant's obligation to pay rent.

In a decision of first impression entered on June 3, 2020, a Chicago bankruptcy court (“Court”) held that a restaurant tenant was excused from paying a significant portion of its rent under the force majeure provisions of its lease because of the governor’s executive order prohibiting in-house dining during the COVID-19 pandemic.[1] This decision is highly significant for landlords and tenants whose ability to service their clients has similarly been restricted by government orders.

A Chicago bankruptcy court recently ruled in In re Hitz Restaurant Group that a debtor’s obligation to pay rent during its bankruptcy case may be temporarily reduced because of a force majeure clause in the lease and the governor’s COVID-19 stay-at-home order. Both landlords and tenants should be aware that this rent reduction was carefully crafted and was not unlimited by the court.

Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.

Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.

NORTHERN DISTRICT OF ILLINOIS BANKRUPTCY COURT HOLDS THAT EXECUTIVE ORDER BARRING RESTAURANT OPERATIONS ON-PREMISES IN LIGHT OF COVID-19 IS A FORCE MAJEURE EVENT THAT PARTIALLY EXCUSES DEBTOR RESTAURANT’S PAYMENT UNDER THE LEASE

At present, global businesses face huge amounts of uncertainty owing to the Covid-19 crisis that is influencing the global economy in an unprecedented manner. From contractual supply chain issues, which have led to the activation of force majeure clauses, among others, to employment issues, insurance disputes, and the real and imminent threat of insolvency of counterparties, businesses need to take quick, effective steps to avoid trouble in these difficult times.