Ac­cess to premises in ten­ant in­solv­ency A land­lord’s right to ac­cess the ten­ant’s premises is gov­erned by the terms of the lease.  Any no­tice re­quire­ments must be ad­hered to, ir­re­spect­ive of any in­solv­ency pro­cess the ten­ant is sub­ject to­Be­fore seek­ing ac­cess land­lords should con­sider wheth­er they want to im­me­di­ately de­term­ine the lease to avoid los­ing any right to for­feit  Land­lords of­ten re­quire ac­cess to premises of an in­solv­ent ten­ant for health and safety and in­sur­ance pur­poses. They may also want to mar­ket the premises (without im­me­di­ately tak­ing back pos­ses­sion) to lim­it any lossNotice re­quir­ing ac­cess for health and safety and in­sur­ance pur­poses can usu­ally be made based on the land­lord’s con­trac­tu­al rights Land­lords can use keys it is hold­ing or re­quest these to ac­cess the premises mak­ing it clear in either case that it is or will hold the keys to the ten­ant’s or­der and is treat­ing the lease as con­tinu­ingThe land­lord can in­form the ten­ant’s in­solv­ency prac­ti­tion­er (IP) that it will change the locks and then hold the new keys to the ten­ant’s or­der if the IP does not re­spondKeys must be held and used strictly for the bases set out in the lease or un­der any ex­press agree­ment reached with the IP Pos­ses­sion of premises Dif­fer­ent types of ten­ant in­solv­ency will com­monly trig­ger a right to for­feit the lease sub­ject to the pre­cise terms of the leaseTo pre­serve a right to for­feit while the land­lord con­siders its op­tions, a rent stop should be im­posed im­me­di­ately and no ac­tion taken to treat the lease as con­tinu­ing, dis­cus­sions with the ten­ant or the IP about the lea­seIf the land­lord does want to pur­sue for­feit­ure, no­tice un­der sec­tion 146 Law of Prop­erty Act 1925 will need to be served un­less the land­lord also has an ex­ist­ing right to for­feit for non-pay­ment of rent Pos­ses­sion - ad­min­is­tra­tion In ad­min­is­tra­tion there is a morator­i­um on for­feit­ure without (a) the ad­min­is­trat­ors’ con­sent; or (b) leave of the cour­tIf ad­min­is­trat­ors do not re­quire the prop­erty for the pur­poses of the ad­min­is­tra­tion, it is very likely that they will grant con­sen­tIf ad­min­is­trat­ors re­fuse con­sent to for­feit, the land­lord can ap­ply to court for per­mis­sion­Ad­min­is­trat­ors may be pre­pared to ac­cept a sur­render of the lease on agreed terms; this should be dis­cussed on a without pre­ju­dice basis if for­feit­ure is also be­ing pur­suedA sur­render can be ef­fected by (a) form­al deed; or (b) op­er­a­tion of lawA sur­render by op­er­a­tion of law can be straight­for­ward, quick and re­l­at­ively cheap, sub­ject to deal­ing with any out­stand­ing charges af­fect­ing the prop­erty which the sur­render could be oth­er­wise sub­ject to Pos­ses­sion - li­quid­a­tion In a com­puls­ory li­quid­a­tion, for­feit­ure by pro­ceed­ings can only be pur­sued with the li­quid­at­or’s con­sent or per­mis­sion of the court­For­feit­ure can be car­ried out by peace­able re-entry, but may be sub­ject to chal­lengeIn a vol­un­tary li­quid­a­tion, the land­lord can for­feit by pro­ceed­ings or peace­able re-entry un­less a cred­it­or/li­quid­at­or/con­trib­ut­ory has ap­plied to court for an or­der to re­strainA li­quid­at­or can dis­claim oner­ous con­tracts in­clud­ing a lease. Dis­claim­er will end the ten­ant com­pany’s rights and li­ab­il­it­ies un­der the lease and, if there is no oth­er party li­able, will de­term­ine the leaseThe land­lord will have a claim for its loss res­ult­ing from dis­claim­er in the li­quid­a­tion­Land­lords can serve no­tice re­quir­ing a li­quid­at­or to elect with­in 28 days wheth­er or not to dis­claim the lease, or oth­er­wise lose the right to do so­The rights and li­ab­il­it­ies of any third parties, such as guar­ant­ors, former ten­ants and sub-ten­ants are un­af­fected by a dis­claim­er­Provid­ing a sub-ten­ant com­plies with the li­ab­il­it­ies un­der the in­solv­ent ten­ant’s head lease, the land­lord can­not take pos­ses­sion, but has no dir­ect con­trac­tu­al re­la­tion­ship with the sub-ten­antThe land­lord, sub-ten­ants and third parties with a rel­ev­ant in­terest in the prop­erty can ap­ply to court for a vest­ing or­der­Agree­ing a sur­render of the lease is also an op­tion if the ten­ant is in li­quid­a­tion Pos­ses­sion - com­pany vol­un­tary ar­range­ment (“CVA”) and re­struc­tur­ing plans (“Plan”) For­feit­ure of a lease can­not be pro­hib­ited by the terms of a CVA or a Plan  However, the terms of the CVA/Plan vary­ing the con­trac­tu­al terms of the lease may mean that there are no breaches of the ten­ant’s cov­en­ants as var­ied­In con­sid­er­a­tion of the com­prom­ises im­posed on land­lords, the CVA/Plan will grant im­paired land­lords an op­tion to re­cov­er pos­ses­sion of the premises by serving a no­tice to va­cat­eThe terms of the lease as var­ied by the CVA/Plan will there­fore gov­ern how (if at all) the lease may be ter­min­ated early 

Over re­cent years, un­for­tu­nately, strug­gling ten­ants en­ter­ing ad­min­is­tra­tion is com­mon­place and with chal­len­ging eco­nom­ic times ahead, this is likely to con­tin­ue to be the case.A com­mon scen­ario when a ten­ant enters ad­min­is­tra­tion is for ad­min­is­trat­ors to at­tempt to sur­render the lease. Why? Ad­min­is­trat­ors, un­like li­quid­at­ors, don’t have the power to dis­claim a lease so un­less there is a break, the only route to bring li­ab­il­it­ies to an end is via sur­render. What does a sur­render mean for land­lords and rates li­ab­il­ity? Not only does a sur­render res­ult in the end of ten­ant’s li­ab­il­ity to the land­lord for rent, ser­vice charge etc but the ten­ant’s li­ab­il­ity to third parties such as util­ity pro­viders and rat­ing au­thor­it­ies.We all know that rates can form a sig­ni­fic­ant chunk of a ten­ant’s out­go­ings and, if a lease is sur­rendered, that li­ab­il­ity will fall to the land­lord un­less an in­com­ing ten­ant or oc­cu­pi­er can be found.If com­mer­cial prop­erty is un­oc­cu­pied then the land­lord will be re­spons­ible for pay­ing rates (sub­ject to any empty rates re­lief).Land­lords and their agents should ex­er­cise cau­tion to avoid a sur­render in­ad­vert­ently tak­ing place (it can be im­plied and does­n't need to be by way of a form­al deed).An im­plied sur­render can take place by cir­cum­stance. For ex­ample;An ad­min­is­trat­or is ap­poin­ted and simply sends keys to a land­lord or agent by post. The ac­cept­ance of those keys could amount to a sur­render of the lease.The ten­ant is in ad­min­is­tra­tion but the premises are empty, the land­lord wants to in­spect and re­market so de­cides to do so – without the con­sent of the ad­min­is­trat­or, this could res­ult in a sur­render be­ing im­plied.The good news is that an im­plied sur­render can be re­l­at­ively eas­ily avoided by tak­ing pro­tect­ive steps or us­ing pro­tect­ive word­ing when cor­res­pond­ing with the ten­ant or its ad­min­is­trat­ors. For more in­form­a­tion around ac­cess, read our see our re­cent art­icle on ac­cess­ing the premises in these situ­ations.  Rates mit­ig­a­tion schemes - What are they? There a num­ber of rates mit­ig­a­tion schemes used by land­lords.The most com­mon is for Land­lords to lease prop­erty to a third party typ­ic­ally for low or nom­in­al rent.That third party will then be in rate­able oc­cu­pa­tion of the prop­erty in ques­tion and the li­ab­il­ity will no longer fall to the land­lord. Rates Mit­ig­a­tion – A cau­tion­ary snail? There have been a num­ber of re­cent de­cisions in­volving rates mit­ig­a­tion schemes and which per­haps demon­strate a more ro­bust ap­proach be­ing taken by both rat­ing au­thor­it­ies and courts to the schemes.One of those cases is Isle In­vest­ments Lim­ited v. Leeds City Coun­cil, a 2021 de­cision in­volving a snail farm busi­ness in a Leeds of­fice build­ing. The court found in fa­vour of the rat­ing au­thor­ity that the lease was no more than a sham, that there was no in­ten­tion to com­ply with the lease ar­range­ments by either the land­lord or the ten­ant and that the land­lord was li­able for the rates. Factors that led to that de­cision in­cluded:the dir­ect­or of the land­lord com­pany ad­mit­ting that the ten­ant was not ex­pec­ted to oc­cupy;the of­fices were simply not suit­able for snail farm­ing and;no snail farm­ing (or any oc­cu­pa­tion) took place!It is im­port­ant to note that, as re­cog­nised by the court, en­ter­ing in­to a lease to avoid rates won’t auto­mat­ic­ally mean the ar­range­ment is a sham and li­ab­il­ity falls to the land­lord but if the true nature of the ar­range­ment doesn’t match with the lease then it could be set aside for rates li­ab­il­ity pur­poses.The facts in the Isle case are per­haps un­usu­al and re­l­at­ively rare but non­ethe­less it per­haps in­dic­ates a great­er read­i­ness on the part of rat­ing au­thor­it­ies to clamp down on sham ar­range­ments and is a use­ful re­mind­er to land­lords im­ple­ment­ing mit­ig­a­tion schemes that they should care­fully con­sider the ar­range­ments they are put­ting in place.

Scen­ario:  Your ten­ant is not per­form­ing well fin­an­cially. It leases a shop premises from you and the store does not gen­er­ate much turnover com­pared to its oth­er stores across the coun­try. The ten­ant com­pany ap­points ad­min­is­trat­ors to at­tempt to save its busi­ness as a go­ing con­cern.The ad­min­is­trat­ors will of­ten ter­min­ate the ten­ant’s con­tract with the elec­tri­city pro­vider to pre­vent on­go­ing charges ac­cru­ing against the in­solv­ent es­tate. What hap­pens if nobody pays the util­it­ies com­pany? If the util­it­ies com­pany is not paid, or the ad­min­is­trat­or va­cates the premises, they are likely to:decim­al­At­tempt to re­cov­er out­stand­ing sums from the prop­erty own­er (i.e. the land­lord) ar­guing that a deemed stat­utory con­tract has aris­en­Take steps to dis­con­nect the sup­ply if pay­ment is not made. This is un­wel­come as re-con­nec­tion can take time and is ex­pens­ive.  How does a land­lord avoid dis­con­nec­tion in this scen­ario?  A deemed stat­utory con­tract with the elec­tri­city sup­pli­er may arise with the land­lord, if the premises are no longer oc­cu­pied by the ten­ant but the premises are still re­ceiv­ing a sup­ply. The land­lord may chal­lenge this, but the util­ity com­pany may then dis­con­nect the sup­ply as lever­age.  To pre­vent dis­con­nec­tion the land­lord may have little choice but to as­sume re­spons­ib­il­ity for the sup­ply go­ing for­ward from a point in time, whilst not ac­cept­ing re­spons­ib­il­ity for ar­rears. The land­lord should enter in­to a sup­ply con­tract on the best tar­iff avail­able to avoid be­ing bound by a deemed con­tract on oner­ous terms.It is pos­sible to as­sume re­spons­ib­il­ity for the util­ity charges whilst still leav­ing the lease in place as rates mit­ig­a­tion. Care should be taken to en­sure that there is no un­ne­ces­sary equip­ment us­ing the elec­tri­city at the premises from the point re­spons­ib­il­ity has been ac­cep­ted - see our re­cent art­icle on ac­cess­ing the premises in these situ­ations.

The situ­ation When a land­lord re­cov­ers pos­ses­sion of premises from an in­solv­ent ten­ant, there are of­ten goods left in the premises.The land­lord will be­come in­vol­un­tary bailee of the goods, which car­ries cer­tain lim­ited du­ties, in­clud­ing not to dam­age or des­troy the goods, but en­titles it to take reas­on­able ac­tion to dis­pose of the goods.De­term­in­ing what ac­tion is reas­on­able may be dif­fi­cult and poses a risk of li­ab­il­ity in the tort of con­ver­sion.De­pend­ing on the nature of the ten­ant’s busi­ness and the goods left, these may range from low-value items (e.g. sta­tion­ery), to high value items (e.g. plant/ma­chinery) which may be third party owned. This will be rel­ev­ant to what ac­tion the land­lord can reas­on­ably take.Deal­ing with dis­pos­al of the goods can of­ten be lo­gist­ic­ally dif­fi­cult, so en­ga­ging bailiffs/agents to man­age the pro­cess can be be­ne­fi­cial. Solu­tions – Torts Act no­tices The land­lord may be able to main­tain that the goods have been aban­doned, but a com­mon pro­tect­ive step for land­lords to take to as­sist in es­tab­lish­ing that is to serve no­tice un­der the Torts (In­ter­fer­ence with Goods) Act 1977 re­quir­ing the ten­ant or any third-party own­ers to col­lect the goods and no­ti­fy­ing them of an in­ten­tion to oth­er­wise dis­pose of the goods.A sched­ule of goods will be at­tached to the Torts Act No­tice served on the ten­ant and any­one else who it is known may have an in­terest in the goods.If the goods are not col­lec­ted with­in a reas­on­able time of giv­ing no­tice, the land­lord may sell or dis­pose of the goods as ap­pro­pri­ate, de­duct any ex­penses of sale and stor­age, and hold the bal­ance on trust for the ten­ant or third party own­er.Spe­cial­ist goods (e.g. mo­tor vehicles) may also be sub­ject to ad­di­tion­al stat­utory re­stric­tions.In some cases, par­tic­u­larly where there are high value items, seek­ing the court’s au­thor­ity to sell may of­fer great­er com­fort to a land­lord. Solu­tions – con­trac­tu­al pro­vi­sions The lease may con­tain an ob­lig­a­tion for the ten­ant to re­move all goods from the premises on lease ex­piry, and may con­tain a deemed aban­don­ment pro­vi­sion in re­la­tion to goods left in the premises, coupled with a land­lord’s right of sale. Leg­al ad­vice should be sought be­fore re­ly­ing on one of these clauses.A Torts Act no­tice could be served in par­al­lel with re­li­ance on a con­trac­tu­al pro­vi­sion for ad­di­tion­al pro­tec­tion. Ad­di­tion­al is­sues If the land­lord in­tends to re­let the premises im­me­di­ately after it has re­gained pos­ses­sion, it will need to move and store the goods se­curely off the premises.If the new ten­ant wants the goods, the land­lord should still con­sider serving a Torts Act No­tice and should agree con­trac­tu­al terms with the new ten­ant which pro­tect its po­s­i­tion if the goods are claimed by the in­solv­ent ten­ant or a third party.If the ten­ant com­pany is sub­sequently dis­solved, any land or chat­tels it owned pri­or to dis­sol­u­tion that have not been dis­posed of will be­come ves­ted in the Crown as “bona va­can­tia”.The Crown can sell or dis­claim any as­sets as it sees fit and al­most al­ways chooses to dis­claim own­er­ship.Any Torts Act No­tice (or oth­er no­tices) should be served on the in­solv­ent com­pany, any in­solv­ency prac­ti­tion­er ap­poin­ted and, fol­low­ing a dis­sol­u­tion, the Crown.

Protest on the streets, protest on­line, even lit­ig­a­tion used as a vehicle for protest.Protest­ors tar­get­ing a busi­ness may be stand­ing in a crowd, hold­ing a plac­ard or shout­ing slo­gans. But they may also be be­hind a com­puter screen or pur­su­ing a claim against the busi­ness through the courts. They may even be work­ing in­side the busi­ness, pre­par­ing to com­prom­ise its sys­tems or leak con­fid­en­tial in­form­a­tion.Wheth­er they are act­iv­ists, em­ploy­ees or cus­tom­ers, all these protest­ors may present a sub­stan­tial chal­lenge and a real threat to busi­nesses, in areas in­clud­ing its se­cur­ity, repu­ta­tion and bot­tom line.