Hi, it’s Deborah and Euzi
Landlords, if you are thinking of getting into an agreement to reduce rent affected by coronavirus (COVID119) pandemic please make sure that you limit the time period involved to possibly three months, and then further review.
A landlord and tenant enter into a side letter stating that the tenant only has to pay 50% of rent. The tenant then enters into a company voluntary arrangement (CVA) and the lease is Cat A stating 100% of the passing rent is payable.
If the side letter does not provide for automatic withdrawal upon the tenant entering into a CVA, and the CVA does not deal specifically with the side letter, there may be an argument that the landlord will only be entitled to 50% of the passing rent on the basis that unless the CVA provides otherwise, the passing rent is what is provided for in the side letter. Accordingly, when the CVA refers to ‘100% of the passing rent’, it is referring to 100% of what is payable under the side letter.
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