Tenant liquidation/winding-up - FAQs for landlords
|What is it?||
Liquidation allows for the realisation of the company’s assets, the dissolution of its liabilities, and subsequent dissolution of the company. In short, it is the process by which a company is brought to an end.
|What is the process?||
A liquidation will be either:
|Can the landlord forfeit the lease and/or exercise other methods of rent arrears recovery?||
Under a CVL, a landlord retains a right to forfeit the premises or exercise other methods of rent arrears recovery. Under CL, the consent of the liquidator or the Court is required. See also Corporate Insolvency – implications on forfeiture/CRAR and on Rental Liability.
Under both CVL and CL, rent arrears rank as an unsecured debt. However, the liquidator will be liable to pay rent and business rates on a day to day basis if he retains the premises for the purposes of the liquidation.
|What happens if the liquidator disclaims the lease?||
Unlike most other forms of tenant insolvency, liquidators can often choose to disclaim the lease and return the property to the landlord.
Where the landlord is keen for certainty and/or to regain possession of the premises, it may serve notice on the liquidator requiring him to decide within 28 days whether or not he is going to disclaim the lease.
See also implications of disclaimer.