COVID-19: Tenant Insolvency in Commercial Leases

Landlord and tenant relationships are likely to come under strain as tenants experience financial difficulties due to the COVID-19 pandemic. For tenant companies such financial difficulties may result in a tenant being placed in examinership, or ultimately in the appointment of a liquidator or receiver. An insolvency event generally constitutes an event of default in a commercial lease. However, a landlord’s ability to enforce its obligations will differ depending on a number of factors, most notably: the terms of the lease, the terms of any guarantee in place and which of these three forms of insolvency a tenant is facing. 

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