Ireland has a temporary insolvency process known as “court protection” and commonly called examinership. This provides a breathing space within which a court will determine whether parts of the business can survive after restructuring. This may entail existing leases being disclaimed. The recent case of Bestseller Retail Ireland Limited gives an interesting example of how the court will exercise its discretion in considering an application to disclaim a lease.

Background

Introduction

Background

The law in relation to landlord's hypothec underwent significant changes on 1 April 2008 when the Bankruptcy and Diligence (Scotland) Act 2007 abolished sequestration for rent and instead provided that the hypothec was to rank as a security in an insolvency procedure.

Since 1 April 2008 certain issues have arisen out of ambiguities in the legislation. These issues have become apparent particularly in administrations. This note looks at:

In an important decision for commercial property landlords, the High Court in Prudential Assurance Co Ltd and Others v PRG Powerhouse Limited and Others has ruled that a CVA (defined below) cannot operate so as to prevent landlords from enforcing a parent company guarantee. The Court's decision however was reached on the basis that to determine otherwise would have been "unfairly prejudicial" to the landlords.

A recent decision from the High Court has shed some light on the remedies available to landlords under insolvency legislation against tenants who enter into administration. The decision provides useful guidance on the ability of a landlord to exercise its right of forfeiture.