Ford (Administrator), in the matter of The PAS Group Limited (Administrators Appointed) v Scentre Management Limited [2020] FCA 1023

A recent decision of the Ontario Superior Court of Justice (Commercial List) (the “Court”) in the receivership proceedings of The Clover on Yonge Inc.[1] (the “Clover Project”) has addressed the question of whether a debtor in receivership can avoid a sales process by redeeming its outstanding debt.

A recent saga played out in the Supreme Court of NSW illustrates why the dispute resolution procedures available to strata owners under the Strata Schemes Management Act 2015 (NSW) make strata title superior to company title.

This is because company title property owners have only the blunt instruments of liquidation and administration available under the Corporations Act 2001 (Cth).

This article analyses how poorly the Corporations Act 2001 (Cth) is equipped to handle disputes between owners of company title properties.

On 1 June 2020, Morgan J granted ex parte application to restrain the presentation of a winding up petition by a landlord of its tenant company, a high street retailer.

The judgment can be read here.

The tenant had been required to close the premises from which it traded in accordance with the instructions from the Government in response to the Covid-19 pandemic. This resulted in a failure to pay rent and service charges.

The PAS Group decision reaffirms the principle that rent incurred during the administration period takes priority in the winding-up payment waterfall

The government’s temporary changes to the insolvency rules to cater for Covid-19 – in particular the new restrictions on the presentation of winding-up petitions – have been well-publicised. These have now been packaged within an Act (the Corporate Insolvency and Governance Act (“CIGA”)) which also brought in significant, permanent changes to UK insolvency law.

On 26 June 2020, the eagerly anticipated Corporate Insolvency and Governance Act 2020 (“CIGA”) came into force. The result is that the changes made to insolvency law will now hinder the ability of landlords to recover unpaid rent from its tenants. We look at how the provisions of CIGA do this and the remaining options available to landlords to recover overdue rent.

What has CIGA changed?

(a) Statutory demands

The Main Street Lending Program is designed to help companies that were in sound financial condition prior to the COVID-19 pandemic to maintain their operations and payroll until conditions normalize. This White Paper gives a broad understanding of the program’s terms and implications by delving into the key questions that market participants are likely to have about the program and addressing the latest changes implemented in the final legal forms and agreements. 

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