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ARTICLE · 04 MAY 2021

Three Tips For Commercial Landlords Managing Tenant Insolvency Issues

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As a commercial landlord, the effects of the COVID-19 pandemic may have left you facing a number of difficult challenges – including how to address tenant insolvency. Here are three strategies for...

CanadaInsolvency/Bankruptcy/Re-Structuring
MLT Aikins LLP
MLT Aikins LLP
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As a commercial landlord, the effects of the COVID-19 pandemic may have left you facing a number of difficult challenges – including how to address tenant insolvency. Here are three strategies for you to consider in these uncertain times.

1. Do not assume you can automatically rely on the insolvency clause in your lease as grounds to terminate the lease in the event of tenant insolvency.

Most commercial leases contain clauses giving the landlord the right to terminate the lease if the tenant becomes bankrupt or insolvent or initiates proceedings under certain insolvency statutes.

Unfortunately for landlords, tenants who initiate restructuring proceedings under the Companies' Creditors Arrangement Act (the CCAA) or Division I of Part III of the Bankruptcy and Insolvency Act (the BIA) are protected against landlords being able to reply on those insolvency clauses to terminate leases by reason only of tenant insolvency.

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