On August 11, 2009, in a long-anticipated ruling in the Chapter 11 case of General Growth Properties, Inc. (GGP), the court denied the motions to dismiss that had been brought on behalf of several of the property-level lenders.1 Few, if any, observers expected that the court would grant these motions and actually dismiss any of the individual SPE borrowers from the larger GGP bankruptcy, as doing so would have likely opened the door for the other secured lenders to seek dismissal.
As the federal government and private markets make progress to quell economic recession and stimulate the engines of financial growth, recent headlines from the commercial real estate industry have focused on certain developments, such as the proposed changes in rating agency methodologies and the repeated false starts with the government’s TALF and PPIP programs.
Yesterday afternoon, the House delayed a vote on H.R. 1106, “Helping Families Save Their Homes Act of 2009” (the “Act”) after a little over an hour of debate, amidst unexpected opposition from some Democrats.
The restrictions on filing statutory demands and winding up petitions has been extended (again) until the end of September 2021. At the same time, the moratorium on landlords evicting commercial tenants has been extended to March 2022. Both are longer than expected. Perhaps more interestingly, the announcement includes reference to the imposition of an arbitration mechanic for arrears – a step from the Government that will provide another route to impose a compromise on arrears.
Collapsed retailer British Home Stores cannot challenge its own company voluntary arrangement as an unenforceable contractual penalty and must repay rental discounts to its landlords, the High Court in England and Wales decided yesterday.
The case, in which Hogan Lovells represented the successful landlord, provides important guidance on the operation of company voluntary arrangements (CVAs), particularly after termination, and the payment of rent as an expense of a company’s administration in priority to other debts.
CVAs
Landlords often ask for a rent deposit when they grant a new lease, or consent to an assignment, especially if the incoming tenant is of shaky covenant strength. This provides security against possible future default.
If a tenant becomes insolvent then this is exactly the sort of situation where a landlord would want to make use of a deposit. Where it is in the “commingling” form (i.e. paid to the landlord so that it becomes a debt in favour of the tenant) then that is unproblematic: no restrictions are imposed by the moratorium which arises on the tenant’s insolvency.
In the latest High Court decision relating to Company Voluntary Arrangements in the UK, the judge held that the Regis hairdressing group CVA should be revoked on the basis that it favoured shareholders at the expense of landlord creditors
The Paris office of Hogan Lovells is pleased to provide this English language edition of our monthly e-newsletter, which offers a legal and regulatory update covering France and Europe for June 2017.
Please note that French legal concepts are translated into English for information only and not as legal advice. The concepts expressed in English may not exactly reflect or correspond to similar concepts existing under the laws of the jurisdictions of the readers.
If you would like to consult this newsletter from past months, please click here.
The UK High Court today took a crucial step towards resolving the difficult issue of when administrators must pay rent.
The government has introduced the Debt Respite Scheme (Breathing Space), which came into effect on 4 May 2021, which allows individuals who are struggling with debt to apply for a “breathing space” in which to sort out their finances. This scheme, which was introduced in response to the unprecedented impact of the COVID-19 pandemic, includes residential tenants who are in arrears of rent.
What is a breathing space?
There are two types of breathing space:-