Everyone loves a bargain – accordingly, there is a lot of interest when liquidators and other insolvency practitioners put a business up for sale. Purchasers jostle like shoppers in the Myer stocktake sale, trying to position themselves as the perfect purchaser. At the same time they try to convey their concern about the value of the business or assets – everyone expects a discount for a distressed business.
The different types of insolvency
When a corporate tenant becomes insolvent, the landlord's rights depend upon the type of insolvency administration to which the tenant is subjected. Being familiar with the different options and the ways in which they are administered will enable property owners to act early and put themselves in the best possible position when faced with an insolvent (or potentially insolvent) tenant.
The three most common forms of insolvency administration which may affect corporate tenants are discussed below.
When disputes between shareholders escalate, one of the shareholders may be tempted to transfer the business to a new entity. Can the shareholder be stopped if he succeeds in obtaining a majority vote?
THE FACTS:
In 7636156 Canada Inc. v. OMERS Realty Corporation1 (“7636156 v. OMERS”), the Ontario Superior Court of Justice (Commercial List) (the “Court”) held that a bankrupt’s landlord was only entitled to have drawn down on a letter of credit by an amount equal to the landlord’s priority claim for three months’ accelerated rent, rather than by the full amount of the letter of credit, and ordered that the landlord pay over the excess to the bankrupt’s trustee.
When negotiating a commercial lease, it is in the landlord’s best interest to require that securities be provided by the prospective tenant in order to protect the landlord against the tenant’s failure to perform its obligations under the lease. A frequent cause of a tenant’s inability to perform its obligations is its insolvency or financial difficulties.
Unfortunately for the Landlord community in Canada’s retail space, the flood of retail insolvencies is likely not over. In addition to open speculation about Sears, 2016 has already seen the insolvency of major Canadian retail locations previously occupied by Danier Leather, Aeropostale, PJ Pets, and Goodwill. There are likely more on the horizon.
This article was presented at the Canadian Law Conference of The International Council of Shopping Centers in April 2016.
There has been a lot written regarding a landlord’s options and remedies upon the default of a tenant under a commercial lease. This paper explores the considerations to be given specifically to third parties at the time of default and potential termination.
The NSW Supreme Court has given a Landlord leave to commence proceedings against a company for rent and make good costs arising after the date of the DOCA.
BACKGROUND
As a business owner or company director, there are many elements you need to consider on a day to day basis to ensure your business runs smoothly. If you lease your premises it is important to understand your rights and what risks you face as a tenant.
A recent decision in the High Court of Australia gave liquidators of landlords extra powers to disclaim leases that are registered on title. For example, if a landlord leases a site to a tenant, and the landlord subsequently goes into liquidation, the liquidator does not have to abide by the terms of the lease, and may refuse to recognise the lease and ask the tenant to vacate the site.
Facts