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Mar 19, 2019 · However, where a tenant goes bankrupt, the bankruptcy trustee has the power to disclaim the lease under section 30(1)(k) of the Bankruptcy and Insolvency Act (“BIA”). To the surprise of some landlords, this disclaimer will extinguish any right of the landlord to the unexpired term of the lease, save for a preferred three months’ accelerated rent claim pursuant to section 136(1)(f).
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Apr 14, 2020 · A: No. The landlord only has a preferred claim for 3 months after the bankruptcy. The landlord can still claim the remaining 3 months of accelerated rent – but as an ordinary unsecured creditor. Evidently, the foregoing also applies to an accelerated rent provision for any other amount (e.g. 9 months, or 12 months).
Jul 6, 2020 · When a tenant goes bankrupt, the trustee-in-bankruptcy steps into their shoes and can choose to keep the lease in force, or assign, surrender, disclaim, or resile from the lease. The landlord will usually want to claim all the arrears and accelerated rent for the rest of the lease term.
Upon the filing of a notice of intention to make a proposal or a proposal, a stay of proceedings is imposed upon the landlord pursuant to s. 69(1) and s. 69.1(1) of the Bankruptcy & Insolvency Act, respectively. That stay applies to claims by the landlord for damages for breach of the lease, if any, that exist as at the date of the filing.
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The bankrupt tenant and the landlord (OMERS) entered into a lease in 2014. The lease required that the bankrupt deliver a $2.5 million renewable letter of credit (the “LC”) to the landlord. The lease provided that the LC was being held “as security for indemnification of Landlord in respect of any losses, costs or damages incurred by Landlord … res...
What amount is the Landlord entitled to draw under the LC as a result of the trustee disclaiming the Lease?
The landlord was only entitled to 3 months’ accelerated rent and was required to pay the LC’s balance to the trustee.
S.71 of the Bankruptcy and Insolvency Act (BIA) provides that all of a bankrupt’s property rights, including a bankrupt’s rights under a lease, vest in the trustee (subject to the BIA and secured c...S.30(1)(k) of the BIA and s.38(1) of the Commercial Tenancies Act gives a trustee the right to disclaim (i.e. surrender) a lease.S.136(1)(f) of the BIA grants a landlord a “preferred claim” for 3 months’ accelerated rent following a bankruptcy. This right was not disputed in this case.It is settled case law in Ontario that “a disclaimer of a lease by a trustee in bankruptcy operates as a voluntary surrender of the lease by the tenant with the consent of the landlord, which extin...Letters of Credit (and other security) securing “the obligations of the tenant under the lease” will not be security for damages suffered as a result of the loss of the lease on disclaimer by a tru...Landlords and lenders taking security must review their lease as well as the form of security itself, and, if needed, amend each to act as security for the damages that result from the loss of the...If a contract provides for a payment (e.g. rent) to be made “promptly”—especially in regards to a pre-condition to the exercise of an option—be aware that the payment can be made after the due date...Disclaiming a lease does not necessarily affect a claim against an assignor or a lease guarantor as those are independent obligations. However, the language of the assignment clause in the lease an...A lease held by two joint tenants on trust for themselves cannot be disclaimed unless both tenants are bankrupt and the two trustees in bankruptcy act together to effect a disclaimer; where only one of the joint tenants is bankrupt, a notice of disclaimer by the trustee in bankruptcy will not end the legal estate or the joint liability of the bankrupt and his co-tenant to pay the rent.
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Dec 11, 2015 · While costs were not awarded against the Trustee, the same may not hold true the next time a bankruptcy trustee purports to disclaim a lease on behalf of a bankrupt landlord, and trustees should therefore take note that the powers granted by section 30(1)(k) of the BIA only apply in respect of leases pursuant to which the bankrupt is a tenant.
