During the pandemic, the UK Government has put legislative measures in place to protect commercial tenants by preventing landlords from using certain remedies such as forfeiture and winding up petitions. However, the legislation does not specifically prevent a landlord from issuing debt claims against its tenants for arrears of rent and other amounts due under a lease (see the recent case of Commerz Real Investmentgesellschaft mbh v TFS Stores Limited  EWHC 863 (Ch)).
However, in response to a landlord's application for summary judgment on its debt claim for unpaid rent arrears, Virgin Active successfully applied for and obtained what is known as a "Bluecrest" stay.
The cases of Sea Assets Ltd v PT Garuda Indonesia  6 WLUK 583 and Bluecrest Mercantile BV v Vietnam Shipbuilding Group  EWHC 1146 (Comm) established that the Court can grant a stay of creditor action to enable a party to implement a scheme of arrangement with its creditors under Part 26 of the CA 2006. The Virgin Active case is the first time that such a stay has been granted since the Bluecrest case and, importantly, is the first time that a company proposing a restructuring plan under the new Part 26A of the Companies Act has obtained a Bluecrest stay.
This is an important case that confirms that, where a company is seeking to implement a restructuring with the intention of avoiding administration or liquidation, it should be entitled to do so without the process being disrupted by unilateral creditor action, and/or that a particular creditor should not, by obtaining judgment, obtain an advantage at the expense of others.
A Bluecrest stay can therefore provide a useful option in the restructuring toolbox, to provide debtors with the necessary breathing space to implement a restructuring in circumstances where a statutory moratorium may be unavailable or impractical.
Travers Smith, alongside Allen & Overy, acted for the Virgin Active group in connection with its successful and ground-breaking Part 26A restructuring plan, with financial advice being provided by Deloitte.
Citation: Riverside CREM 3 Ltd v Virgin Active Health Clubs Limited  EWHC 746 (Ch)
Travers Smith instructed Ryan Perkins of South Square