Insolvency Implications For Commercial Leases

It is symptomatic of the current financial climate that we are frequently asked to advise on a landlord's remedies against the corporate tenant of an occupational lease in circumstances of the latter's insolvency. The various categories of corporate insolvency and the landlord's position are considered below:

Liquidation

The landlord's position vis-à-vis rental payments due to him pursuant to the lease (including rent, service charge and other payments expressed as being payable to the landlord thereunder) differs depending on whether the same accrued prior to the commencement of the liquidation (in respect of which the landlord ranks as an unsecured creditor), or subsequent to the commencement of the liquidation. In respect of the latter, if the liquidator elects to occupy the property (which is typically done in consultation with he landlord for an agreed period) and where the property is used for the benefit of the liquidation and is necessary for the winding