In the case of 1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd.[1](the "Fortress Case"), the Ontario Court of Appeal held that a judgment creditor is not entitled to enforce a writ of seizure and sale against a registered owner that beneficially holds land in trust for a judgment debtor, nor to priority over arm's length construction financing.

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.

Real Estate Quarterly

Summer 2020

Contents

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For many years, commercial lenders have struggled with ways to protect their collateral following a borrower’s default. If a lender wanted to appoint a receiver to ensure the collateral maintained its value, Florida law provided inconsistent guidance and was a patchwork of different legal opinions detailing when appointment was appropriate and what powers the receiver would possess. Fortunately, a new Florida law will finally provide welcome clarity, certainty and expediency in the appointment of receivers in commercial property litigation and related foreclosures.

Government intervention in the commercial letting market, in response to COVID-19, has continued with the Corporate Insolvency and Governance Act 2020 becoming law on 25 June.

We have updated our June briefing on remedies for unpaid rent to reflect the recent legislative changes, including the extension of the temporary prohibition on forfeiture.

In addition to cases that are similar to those the previous two batches concerning enforcement against enterprises over pandemic prevention and control materials, the 13 cases in this third batch also contain examples of enterprises not in the pandemic prevention and control materials business resuming work and production. The cases fully shows how the courts used the Internet and telephones to coordinate and negotiate enforcement during the epidemic, thereby keeping public order, minimizing losses and achieving wins for multiple parties.

On 13 December 2019, in Franz Boensch as Trustee of the Boensch Trust v Scott Darren Pascoe[1] the High Court unanimously dismissed an appeal from a judgment of the Full Court of the Federal Court of Australia, in which the appellant sought compensation from his former trustee in bankruptcy pursuant to section 74P of the Real Property Act 1900 (NSW) (RPA).

Extension of tenant protection provisions

Government intervention in the commercial landlord and tenant relationship has created significant, but time limited, restrictions upon some of the remedies available to a commercial landlord against a non-paying tenant. These restrictions are well known but the period during which they will apply has now been extended:

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.