Tenants Left Out In The Cold: Liquidators Powers To Disclaim Leases

A recent Victorian Court of Appeal case has highlighted that a tenant with a lease is not always secure. In Willmott Forest Ltd (In Liquidation) the Court confirmed that the liquidators of that company were entitled to terminate leases in order to facilitate the sale of the property and the liquidation of the company leaving the tenants out on the street with only a right for damages along with all the other creditors of the failed company. The case highlights the potential vulnerability of tenants when their landlords go into liquidation.

The practical considerations from this case are that in order to better protect themselves tenants needs to:

• Be satisfied that the landlord is financially sound;