The news that USC has taken steps to commence an insolvency process is further proof (if proof were needed) that despite what TS Elliot may have claimed, January really is the cruellest month. 

The clothes retailer Bank went into administration at the start of January, now USC has filed a notice of intention to appoint administrators and Tesco has announced an intention to close more than 40 stores.  The issues facing retailers are fairly obvious.  Consumers have much less discretionary spend available to them and are now much choosier about where they spend the cash they have.  But the difficulties of retailers cannot be taken in isolation.  The loss of jobs that will ensue has a social impact on all of us and suppliers and landlords in particular will also bear the brunt of failures and closures. 

Landlords and suppliers face a difficult choice when a customer/tenant is in distress.  Is it better for a supplier to continue to supply in the hope of its customer surviving and generating sales at the risk of the supplier ending up being more out of pocket than if they had pulled the plug early?  Should a landlord agree to a tenant's request for amended lease terms that will be more favourable to the tenant in the hope of keeping premises occupied (albeit with a lower rental income)?  Just how easy will it be to find a new (paying) tenant going forward?

In Scotland, landlords can avail themselves of the remedy of hypothec and that may go some way to mitigate loss in the event of a tenant insolvency and suppliers can look to some protection from retention of title clauses but neither remedy will be likely to fully compensate a creditor for the loss of a customer or tenant.  Parties who are exposed to the insolvency of a debtor must now (more than ever) be looking to take steps to protect their own businesses from the risks of third party insolvencies.  We would very much doubt that we have seen the last of the January fails.