RE: A COMPANY (INJUNCTION TO RESTRAIN PRESENTATION OF PETITION)

Short Read:

Despite the law not yet being in force, the High Court has this week granted an unnamed high street retailer an injunction preventing one of its landlord creditors from presenting a winding-up petition against it on the expectation that the restrictions in the Bill will shortly be enacted.

Traditionally, Midsummer’s Day marks a time for festivities and optimism. But, as 24th June approaches, commercial landlords and tenants are unlikely to enjoy such sanguinity.

This article was first published by CoStar News on 5 June 2020 and can be seen here.

The decision of Mr Justice Morgan in A Company (Injunction To Restrain Presentation of Petition) [2020] EWHC 1406 (Ch) (judgment anonymised) which was handed down on 2 June 2020 will be of interest to tenants and landlords alike in the current climate. The judgment, which follows the decision in Travelodge Ltd v Prime Aesthetics Ltd [2020] EWHC 1217 (Ch) will be of huge precedent value to commercial tenants that have been impacted by coronavirus and have been unable to meet their rent obligations as a result.

Whilst the government has taken significant steps to help protect businesses from collapsing as a result of the current pandemic, it is evident that companies across the board are acutely aware that such protection cannot last forever.

The landlord argued that the force majeure clause did not apply at all for three primary reasons. The Bankruptcy Court rejected each of the landlord’s arguments.

In an economic climate where the risk of insolvency is high, it is paramount to that creditors are prepared for debtors going into administration. Participation as a creditor does not have to be passive. The ability to understand and protect your own interests, can be enhanced with knowledge and early action.

In this article, we pinpoint eight key considerations landlords should be mindful of when dealing with the administration process, and outline key action items from day one.

Key considerations

On 20 May 2020, the Corporate Insolvency and Governance Bill (the “Bill”) was introduced to the UK Parliament. The Bill is expected to be fast-tracked through Parliament and be enacted as early as June 2020.

The Bill deals with both temporary measures in response to the immediate effects of the COVID-19 pandemic, and major reforms to the insolvency regime. It represents one of the most debtor-friendly developments in recent times.

The Government has now published the much anticipated Corporate Insolvency and Governance Bill (the “Bill”), which will introduce various new corporate restructuring tools as well as the temporary changes to insolvency law that have been announced by the Government since the onset of the COVID-19 pandemic.

Goulston & Storrs bankruptcy attorney Doug Rosner recently collaborated with Thomson Reuters to create a three-part video series regarding alternative solutions to the financial problems of distressed companies. This summary highlights the key elements to a successful out-of-court restructuring (part two of the series).