Summary: Political uncertainty, increasing inflation, threat of interest rate rises and insecurity of overseas investment. Should real estate lenders remind themselves of the enforcement available if things go awry? Much has changed since the 2008 financial crisis; much for the better. In this article we look at the main enforcement options and suggest some factors that could result in a new approach to restructuring and enforcing real estate loans.
Enforcement Options
It has long been a bone of contention for landlords that tenants can simply file a notice of intention to appoint administrators in order to get an automatic moratorium against any enforcement action. This prevents a landlord from forfeiting, suing or exercising CRAR irrespective of whether the tenant goes into administration and, seemingly, whether it ever really had such an intention.
Applications
Rule 12 sets out rules relating to applications, (excluding administration applications, winding up petitions and creditors' bankruptcy petitions) including:
Disclaimer - Rules 19.1 - 19.11
The Rules relating to Disclaimer remain largely unchanged, except for bankruptcy and liquidation being included in the same section and some minor updates to the Act. The deadlines for all actions remain unchanged.
19.8 - Application for permission to disclaim in bankruptcy (section 315(4))
The notes in this section refer to changes within the Act as amended by the Deregulation Act 2015 and the Enterprise and Regulatory Reform Act 2013.
The recent spate of high-profile company voluntary arrangements (CVAs), including those of BHS, Store 21 and more recently Love Coffee, The Food Retailer Group and Blue Inc, has placed this corporate rescue tool back in the spotlight.
CVAs can be a useful mechanism for turning around a failing business, but it is clear that they are no panacea. First, they don’t always work, and BHS is a striking example of a CVA failing to save a business despite compromising a large number of leasehold liabilities.
Key Points
- Reaffirms the importance of considering whether an applicant’s position would be improved by the making a vesting order
- Useful guidance on the extent of the court’s powers when granting a vesting order.
The Facts
You will have previously seen a landlord's consent is usually required to enable a pharmacist to assign or sell their lease to a third party.
It is usual for the landlord's consent to be specified not to be unreasonably withheld or delayed.
On a lease assignment a landlord will want to ensure that the tenant is of sufficient financial strength to be able to comply with the lease covenants (including payment of the rent).
- On 29th September 2004 the Trustees of the Ashtead United Charity allocated Mrs Janet Watts accommodation in an almshouse, in fact one of 14 residential flats the Charity owned at Ashstead in Surrey. In May 2015 they issued proceedings for possession based on the allegations that Mrs Watts had acted in an anti-social manner, swearing, spitting, and aggression. This was a breach of the terms of the Appointments Letter under which she was allocated the property.
Legislation soon to take force creates a new special administration regime for private providers of social housing, introducing changes that will transform restructuring in the sector.