Is a landlord’s right to forfeit a lease a security?

In the case of Re Lomax Leisure Limited (Chancery Division) (Judgment delivered 22 April 1999 by Mr Justice Neuberger) the Court held that the landlord, RAT (Holdings) Limited ("RAT"), was entitled to forfeit a lease by peaceable re-entry despite the fact that the tenant company, Lomax Leisure Limited ("Lomax"), was a company in respect of which a petition for an administration order had been presented; the basis for this decision being that RAT’s right to forfeit did not constitute security over Lomax’s property and was therefore not restricted by the Insolvency Act 1986 ("the 1986 Act").

Lomax was a company formed in 1998 for the specific purpose of developing a night-club in premises which they leased from RAT. Another company, Lomax Car Parks Corporation Limited ("LCC"), provided funds to Lomax to enable them to meet the continuing costs of their contractors. The shareholders of Lomax included a director of RAT, and a director of LCC. By 7 April 1999 LCC became aware