Landlord Insolvency: Using a Bailiff

When a landlord is considering distraining or terminating a tenant’s occupancy, he is likely to use the services of a bailiff. The distress against or termination of a lease are covered by the CTA and the Rent Distress Act. The three most frequent distress methods carried out by bailiffs are:
 
Walk in [...]

Tenant Insolvency: Priority over Bailiff

Commercial tenants who are behind in their rent payments are subject to having the landlord seize their inventory or other chattels. The landlord will appoint a bailiff to seize, or distrain against, the assets on the landlord’s behalf. The bailiff is required to inventory the assets and have the assets appraised. After [...]

Tenant Insolvency: What is Rent

The Trustee is obligated to pay “rent” only. The lease agreement should be read carefully to determine what is included in the calculation of rent. Often additional items, such as common area costs, insurance, property taxes, GST, etc. are defined as rent or additional rent. In this case, the Bankruptcy Trustee is [...]

Tenant Insolvency: Landlord’s Claim

The BIA provides landlords with a preferred claim for arrears of rent in the three months immediately preceding the date of bankruptcy and a claim for accelerated rent for the three months following the date of bankruptcy. The claim for accelerated rent is only permitted if the lease agreement provides for such a claim. [...]

Tenant Insolvency: Liquidation Sales

A lease agreement may contain a clause that prohibits on-site liquidation, or bankruptcy sales. Many landlords believe that on-site sales will cause disruption to the other tenants and fear that the sales will be conducted in an offensive manner. Landlords will often consent to on-site sales if they are provided with an overview [...]

Tenant Insolvency: What Happens When the Wrong Goods are Sold?

Occasionally we do not receive any assistance from the debtor in determining which assets, if any, do not belong to them. The BIA allows for a person who claims any property in the possession of the Trustee to file a proof of claim. The form of “property claim” is provided for in the [...]

Tenant Insolvency: Proposals

Upon filing a proposal, or between the date of the filing of a Notice of Intention to File a Proposal and the filing of the proposal, a commercial tenant may disclaim a lease. The tenant must give the landlord thirty days notice of its intention to disclaim the lease. The form of notice [...]

Tenant Insolvency: Right to Retain, Assign or Disclaim Lease

The CTA provides that a Trustee has the right to assign the lease of a bankrupt to a third party. If the lease contains a covenant or condition that the tenant may not assign or transfer the lease without the consent of the landlord, the Trustee could either obtain the consent of the landlord, [...]

Tenant Insolvency: Property on the Premises

The Courts have found that property on the premises includes only those goods and chattels capable of being located physically on the premises, in other words, only “fixed assets”. Accounts receivable, trademarks, patents, share certificates, software source code and other intangibles are not to be considered part of the realization from the premises. [...]

Tenant Insolvency: Distress vs. Termination

Absent a stay of proceedings, the landlord retains the right to distrain against the goods on the premises or terminate the lease. These options are mutually exclusive, and irrevocable. The right of distress, under the Rent Distress Act, requires a commercial tenancy. Therefore, if a landlord has terminated the lease, he has [...]