Landlords and tenant insolvency

Start with the lease and security

Identify the tenant’s legal name, lease, rent dates, deposit agreement and any guarantor. Keep a schedule separating rent, service charge, insurance and other sums, with the period each covers. A rent deposit and a guarantee can provide rights separate from an unsecured proof, but their terms and the insolvency restrictions still matter.

The location of the property and the jurisdiction of the insolvency can raise different questions. Do not infer the applicable property law from the office holder’s address or the landlord’s place of business.

Check before enforcing

Administration and other protective procedures can restrict possession, forfeiture, diligence or proceedings. Consent or court permission may be required. The existence of arrears does not itself establish that a particular enforcement action is permitted during the case.

Ask what use is being made of the premises and retain the response. Whether occupation costs rank as an expense requires legal analysis of the procedure and facts; it is not determined solely by the date an invoice was issued.

Understand the possible outcomes

The business may continue, a lease may be transferred with consent or court involvement where relevant, terms may be renegotiated, or occupation may end. A liquidator’s ability to disclaim or abandon property is jurisdiction-specific. Surrender, disclaimer and forfeiture are different events with different effects on guarantors and other interests.

• Separate the property claim from the unsecured arrears claim.
• Record keys, access, occupation and communications.
• Read any proposal affecting the lease, including a CVA or restructuring proposal.

The position in Scotland

Scottish leases, irritancy, diligence and insolvency property treatment require Scottish analysis. The England and Wales statutory disclaimer model must not be assumed to apply unchanged. Corporate winding-up and administration rules also differ from Scottish personal sequestration.