The statutory moratorium may not protect a company in administration against proceedings continuing under the Landlord and Tenant Act 1954

Property professionals will no doubt be familiar with the statutory moratorium that comes into effect immediately upon an administration order being made in respect of a company. The main effect of this is that no legal process may be started or continued against the company or property of the company except with the consent of the administrator or with the permission of the court.

The background

In a judgment issued on 15 December in the English High Court (Lehman Brothers International (Europe)(in administration) v CRC Credit Fund Limited & Ors [2009] EWHC 3228), and based on assumed facts presented to him, Mr Justice Briggs described the failure by LBIE to protect client monies from the impact of insolvency as "truly spectacular" and involving "shocking underperformance".

Yesterday, the U.K. Treasury announced that it had published a report setting out detailed proposals for the effective management and resolution of failed investment banks.

As previously described in our Alert of Oct.

On 1 May 2009, the administrators of Lehman Brothers International (Europe) ("LBIE") applied to the English High Court for directions on certain issues relating to "Client Money" (as defined in the UK Financial Services Authority's Client Assets Rules, the "CASS Rules") held by LBIE. LBIE was regulated by the FSA and was required to comply with the CASS Rules.

In a recent interesting Scottish case, HSBC Bank plc, Re an Order to wind up Kirkbride Investment Limited [2009 Scot CS CSOH 147], the Court of Session granted an application to wind up an overseas company and appoint Joint Provisional Liquidators. The company, registered in Gibraltar, was involved in property development in Scotland with the secured lending provided by the Bank.

The Facts

The FSA has released a further update on Keydata Investment Services Limited. The update reads as follows:

"On 18 November 2009 the Luxembourg financial services regulator, the Commission de Surveillance du Secteur Financier (the CSSF) applied to the Luxembourg court for Eric Collard of KPMG ADVISORY s.a.r.l to be appointed as administrateur provisoire (provisional administrator) of Lifemark S.A. (Lifemark).

Company Administrations in the UK are still on the rise. An administration is the nearest UK equivalent of a US Chapter 11 procedure or an Insolvenzplan in Germany. You may not have heard the term ‘pre-packs’ but if you become involved with any struggling business in the UK, be it your own or that of a customer, supplier or a tenant, you should know what you are up against.

Scottish Lion Insurance Company is attempting for the second time to promote a solvent scheme of arrangement to bring its insurance business to an early close. The first attempt was abandoned in 2005 when the company was ordered by the Scottish Court to disclose to one objecting creditor a list of all its scheme creditors, whereupon the proposed scheme was withdrawn.

1. Can I lock the tenant out of the property until they pay?

No. If a tenant has been placed in administration then there will be a moratorium in place. This gives a company some breathing space. Rights against the company, such as forfeiture or conducting legal proceedings, can only be pursued with either the consent of the administrator or a court order. As noted last week, changing the locks is likely to forfeit the lease. Unless you intend to forfeit and obtain the necessary permission to do so, you should not change the locks.