Introduction

Landlords have no reason to fear Frankenstein’s monster, following the decision of the High Court in EMI Group Limited v O&H Q1 Limited. The court was considering, once again, the anti-avoidance provisions in the Landlord and Tenant (Covenants) Act 1995. Many will be familiar with the effect of the 1995 Act, which ensures that both tenants and their guarantors are released on assignment.

It has been understood since the Hindcastle case in 1997 that a guarantor’s payment obligations under a lease survive disclaimer by an insolvent tenant’s liquidator.  What has been less clear is how that works, given that the tenant’s obligation to pay rent dies when the lease is disclaimed.

Landlords often ask for a rent deposit when they grant a new lease, or consent to an assignment, especially if the incoming tenant is of shaky covenant strength. This provides security against possible future default.

If a tenant becomes insolvent then this is exactly the sort of situation where a landlord would want to make use of a deposit. Where it is in the “commingling” form (i.e. paid to the landlord so that it becomes a debt in favour of the tenant) then that is unproblematic: no restrictions are imposed by the moratorium which arises on the tenant’s insolvency.

The UK High Court today took a crucial step towards resolving the difficult issue of when administrators must pay rent.

Last week the High Court of England and Wales revoked a company voluntary arrangement (CVA) promoted by retailer Miss Sixty in a damning judgment that called into question the conduct of the practitioners involved. The case of Mourant & Co Trustees Limited v Sixty UK Limited (in administration) [2010] could end so-called guarantee stripping – where the CVA purports to discharge guarantees given by a third party – and provide powerful ammunition to landlords seeking to negotiate future CVAs with tenant companies.

His Honour Judge Purle QC in Re Cornercare Limited [2010] EWHC 393 (CH) has clarified English law on the filing of successive notices of intention to appoint administrators. He has held that there is nothing in the relevant provisions of the Insolvency Act 1986 ("IA 1986") to prevent the filing of successive notices of intention to appoint administrators, where the original notice of intention to appoint an administrator had not been acted upon for good reason.

On 28 June 2022 the Insolvency Service published a report it had commissioned from RSM UK to assess the impact that CVAs were having on commercial landlords (the “Report”).

National Car Parks' proposed restructuring plan aimed to write-off arrears, cut rents and close unwanted sites but why did the plan stall?

On 30 April 2021, National Car Parks launched its proposed restructuring plan, which is the flagship new restructuring process introduced last June through the Corporate Insolvency and Governance Act 2020. Around a dozen restructuring plans have come to market so far, but the NCP plan was only the second (the first being Virgin Active) to involve landlord creditors.

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