0370 270 6000

already registered?

Please sign in with your existing account details.

need to register?

Register to access exclusive content, sign up to receive our updates and personalise your experience on brownejacobson.com.

Privacy statement - Terms and conditions

guidance when forfeiting against a tenant in administration

2 October 2015

In the matter of SSRL Realisations Limited (in administration)

Landlords faced with a tenant’s breach will usually have the contractual right to forfeit or terminate the lease. However if the tenant is in administration the landlord’s right to forfeit is prohibited without the permission of the court or the administrators. Previous case law has demonstrated that the court will grant that permission in certain circumstances and this case provides landlords with further comfort. 

The case of SSRL Realisations Limited (in administration) concerned premises in the Brunswick Centre in London let to the chain restaurant Strada. The companies operating the Strada chain entered a complex pre-pack administration in September 2014. At the time of the landlord’s application to court, the occupying tenant was Strada Trading Limited (STL) to whom the administrators had been trying to assign the lease for some nine months. The lease had over 16 years remaining. The landlord was granted permission to forfeit after arguing that STL was leasing the premises illegally and that the administrators had spent far too long trying to find an acceptable assignee.

In reaching its conclusion, the court applied the principles in Re Atlantic Computer Systems plc [1992] 1 All ER 476, namely: (1) whether the grant of permission would impede the purposes of the administration, and (2) if so, whether more loss would be suffered by the landlord if permission were refused than by the insolvent estate if permission were granted. 

As to the first issue, it was held, contrary to the arguments of the administrators, that there were no grounds to believe that the administrators would be able to achieve a premium by assigning the lease to a third party. The judge accepted that it might have some modest premium value, but noted that any such value was locked up due to the landlord’s legitimate exercise of its legal rights.

As to the second issue, the court referred to the guidance in Atlantic Computers and confirmed that an administration is intended to be a temporary regime only. The administrators’ delay of nine months, during which time they had focussed on STL and not on marketing the lease, did not accord with that guidance. The fact that the administrators had been paying the rent as an expense of the administration did not mean that there had been no loss to the landlord, rather, the landlord had lost the opportunity to grant a new lease of the premises at a higher rent to a tenant who could provide a good covenant. 

Commercial landlords can take comfort in this judgment, confirming that an administrator in this position would have to show not only that a lease has some value, but also that it is sufficiently valuable that any failure to assign it will impede the achievement of the purpose of the administration. This must be considered in the context of the administration as a whole and will need to be supported by robust evidence in order to succeed.

training and events

11Dec

Lunchtime learning session on Ocean Outdoor -v- London Borough of Hammersmith and Fulham Nottingham office

The Court of Appeal has recently handed down judgment in Ocean Outdoor v London Borough of Hammersmith & Fulham. Join us on our lunchtime learning session about this case.

View event

focus on...

Upcoming webinars

IR35: If it walks like a duck...

In the UK, a great number of organisations engage self-employed IR35 contractors to complete work on their behalf.

View

How to commercialise your IP: licensing, spin outs and JVs

Our expert panel, comprised of IP and corporate law specialists, will be discussing IP commercialisation strategies, their benefits and pitfalls, drawing on experience across the private, public and higher education sectors.

View

Legal updates

Public matters - October 2019

This month includes government outsourcing, amending contracts, land registration 2025 target for public sector, inquests, and public procurement with SMEs, Brexit and the mafia.

View

Legal updates

Foster carers are not ‘workers’ according to the Employment Tribunal

For anyone who has followed the evolving case law in the social care sector, this title is likely to raise some questions. Most notably, “What about the decision in Armes?”

View

The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

mailing list sign up



Select which mailings you would like to receive from us.

Sign up