Snapshot

There are many practical steps, pitfalls and strategies available for recovering commercial rent arrears, both before and after tenant insolvency

Liquidators accepting a new appointment will have to think carefully if there's a possibility of disclaiming onerous property as part of that appointment.

Once a tenant becomes insolvent a landlord's recovery options become more limited but there are important steps a landlord should be taking.

1. Check the terms of any rent deposit agreement

Check the terms of the arrangement to find out how the deposit is held and when it is available for to use. In some cases, such as when a tenant has entered into a creditors' voluntary agreement, consent from the court may be required before the deposit can be used.

2. Find out the tenant's status

Two broad themes are currently emerging in relation to European private equity real estate financing.

First, market commentary has noted that €150 billion of this finance is due to mature by 2025 – the "wall of credit".

Over the last few years, several cases of defaulting real estate companies, including major players like, Amrapali, Jaypee Infratech and Supertech, have been stuck at various stages of insolvency proceedings under the provisions of the Insolvency and Bankruptcy Code, 2016, as amended (“Code”).

The Supreme Court handed down its judgment on the case of Rakusen v Jepsen on 1 March 2023, deciding that rent repayment orders cannot be made against superior landlords.

The case considered whether rent repayment orders (RROs) under the Housing and Planning Act 2016, could be made against immediate landlords only, or whether superior landlords are also liable. 

This note aims to provide brief and practical answers to common questions on the law of assignment in English law finance transactions.

1. Are all notified assignments legal assignments?

Here’s a hard-knocks rule:

• When you can’t or won’t explain the true reason for taking a position in negotiations or litigation, distrust and suspicion of the worst-possible motives will follow.

An Exhibit A for this rule is an opinion issued February 9, 2023, in In re Heaven’s Landing, LLC, Case No. 20-21350, Northern Georgia Bankruptcy Court (Doc. 145).

Here are illustrative statements from that opinion:

In den letzten Wochen haben in Deutschland zwei größere Betreiber der stationären Pflege und von betreutem Wohnen Insolvenz angemeldet. Auch wenn dies aus unserer Sicht nur Einzelfälle sind und kein Krankheitssyndrom der Pflegebranche darstellt, geben diese Fälle Anlass für eine kurze rechtliche Orientierung wie sich solche Insolvenzen auf alle Leistungsbeziehungen auswirken.

Auswirkungen auf Miet- und Pachtverhältnisse