Where a landlord forfeits its lease, subject to any available relief or exemption, the landlord is liable to business rates in respect of the premises.
Empty premises business rates exemption will provide time-limited relief to a landlord who has re-entered premises. However, a landlord should be cautious of exercising its right to forfeit a lease in cases where it does not have another tenant "waiting in the wings".
The ratepayer
Business rates are paid by occupiers and, in certain circumstances, owners of premises.
A question facing many landlords is whether, when a tenant company faces insolvency and shows no intention of continuing to trade from the premises, they should take back the property and seek to relet it?
There are several key issues here, including:
- rates liability
- mitigating losses
- ability to recover from third parties and former tenants.
A landlord's decision has often turned on the type of insolvency faced by the tenant.
If a liquidator disclaims the lease:
Virgin Active has been in the news recently, as it has proposed restructuring plans which rely on the new legislation found in the Corporate Governance and Insolvency Act 2020.
In this insight, we will explain:
In 7636156 Canada Inc. (Re)[1], the Ontario Court of Appeal ("OCA") confirmed the right of a commercial landlord to draw on a letter of credit given as security pursuant to a lease, even when the draw takes place after the termination of the lease by the tenant's trustee in bankruptcy.
The Corporate Insolvency and Governance Bill was first read to Parliament on 20 May 2020. It is set to be fast tracked into legislation and will likely be law by 10 June 2020.
As the economic crisis brought on by the novel coronavirus (COVID-19) pandemic deepens, commercial landlords would be wise to review the deposit language contained in their leases with their counsel. In particular, the wording of the rent deposit and security deposit provisions should be examined more closely and consideration given to who would be entitled to the deposit in the context of a tenant bankruptcy.
Restrictive covenant - if in doubt, lender should be notified; the costs risk of insolvency proceedings; interim payments; service of claim form; Wragge & Co's banking and finance experts bring you the latest on the cases and issues affecting the lending industry.
Restrictive covenant - if in doubt, lender should be notified