During the Covid-19 pandemic, the hospitality industry suffered huge losses with widespread financial impacts across global economies. A large hotel group, co-invested in by two investor groups, were tenants renting hotel properties from six landlords when the pandemic hit. As a result of Covid-19’s impact on the hotel industry, the tenants were unable to pay rent and owed more than 6 million in arrears to the landlords.
The hotel group received money from Government subsidy relief funds and planned to use this to pay their landlords. However, while they had received the payment from the Government, their grant application had not been approved yet, and there was uncertainty around whether the money would need to be paid back.
To settle the matter, the parties agreed that payments could be held until the government reached its decision on the grant application. Shieldpay held the monies owed in escrow until either; the subsidy was awarded by the government and funds could be paid to the landlords, or in the case that the subsidy was not awarded, the monies would be used to pay back the grant. Depending on the outcome, when the transaction was triggered, the funds were allocated aligned to the conditions of the escrow.
