Our Real Estate Disputes Resolution team became involved in the immediate aftermath of the deal once landlords became aware of the situation and the uncertainty this created in circumstances where many had previously assumed the leases would be disclaimed in the wake of the liquidation and were accordingly advancing negotiations for new leases with interested third parties.
The challenge
Property Litigation’s focus was on ensuring that Hays could trade from the stores. This meant liaising closely with Ashursts, the Joint Special Managers’ (JSM) lawyers and dealing with multiple agitated landlords nationwide, preserving ’54 Act renewal lease positions where possible, fending off threats of forfeiture, considering insolvency procedures on multiple notices to elect and the effect this had on our clients obligations under the purchase agreement with the JSM, pursuing issued lease renewals and general strategic advice on preserving lucrative locations. The impact of the Coronavirus pandemic on the travel industry in particular provided an additional layer of complexity in respect of which we have assisted the client regarding its communications with landlords and understandable re-evaluation of its property portfolio in light of economic challenge.
The solution
The timeframe for the work was intense. The deal completed on a Thursday and by Friday afternoon we had 30 instructions to deal with. This rose steadily over the following weeks to in excess of 200 properties where property litigation input has been required.
We provided excellent client service in gathering a small team to deal solely with these matters for the necessary period, working almost round the clock alongside the client and its team.
Given the huge public interest in the Hays’ story as “saviours of the High Street”, we have had to manage difficult issues arising in respect of individual properties sensitively and pragmatically to achieve the best result not only for our client, but also in relation to the liquidators of Thomas Cook and ensuring a proactive relationship with landlords can be maintained, notwithstanding the impact of the Coronavirus pandemic.
As a team REDR has dealt with in excess of 200 properties where varying degrees of property litigation has been required, including estate management work, lease renewal proceedings, surrenders of leases, leases subject to notices to elect, as well as detailed consideration and advice regarding the tenancy status of our client following the disclaimer of Thomas Cook leases by the liquidators following expiry of Hays’ 12 month licence to occupy in October 2020, and Hays’ continued occupation of such premises thereafter. As Hays’ exclusive legal advisors for property litigation, much of our work has involved “fire-fighting” situations that could otherwise lead to termination of existing interests and closure of stores prior to legal assignments or new leases being agreed with affected landlords. This has involved liaising closely with Ashurst LLP, lawyers for the liquidators, and dealing with multiple agitated landlords and agents nationwide, preserving ’54 Act renewal lease positions where possible, fending off threats of forfeiture, considering insolvency procedures on multiple notices to elect and the effect this had on our client’s obligations under the purchase agreement with the joint special managers in the liquidation, issuing lease renewal proceedings, managing existing lease renewal proceedings (those issued prior to the liquidation) and general strategic advice on protecting our client’s presence in lucrative trading locations where interest from third parties for the premises in question has been fierce.
The impact
The client’s aim has been to re-open and re-employ as many former Thomas Cook stores and staff as possible, which meant ensuring that Hays could continue to trade effectively from the acquired stores without risk of eviction from landlords.
Hays has remained in possession of all stores where there were issues. Working closely with Hays nominated agent, Savill, we were able to manoeuvre Hays into a position where protected leases were granted direct from landlords, assignments of existing leases were achieved, and where more flexible terms of occupation were required, particularly post-pandemic.
The further unexpected development of a global pandemic and its huge impact on the travel industry has provided further challenge and inevitable changes in client strategy, requiring continuing advice and support regarding a re-valuation of the client’s property portfolio and legal assistance in concluding agreements with affected landlords and preserving Hays’ ability to continue to trade well into 2021 and beyond.
As a result of the above work we are now receiving regular instructions in relation to property related issues arising on the rest of Hays’ store portfolio, advising on matters such as lease terminations and dilapidations, providing legal support where required to the company’s Head of Property.