Administration

You will be prevented from being able to recover arrears of rent and/or to forfeit the lease without permission of the Court or consent of the administrator.

What is administration?

Administration is intended to be a temporary regime. It is a breathing space while the company seeks to achieve one of the statutory purposes: to rescue the company as a going concern as the primary objective, to achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up as the second objective or the realisation of some or all of the company’s property to make a distribution to one or more secured or preferential creditors as the third objective. Once a company enters administration a statutory moratorium will be imposed.

Can I recover rent arrears?

Administrators cannot be compelled to pay pre-administration arrears (including rent) and the landlord will have to prove in the administration, or else look to third parties, for those sums which were outstanding at the date that the administration commenced.

When administrators use the premises for the purpose of the administration, they must pay rent for the premises as an expense of the administration, accruing on a daily basis.

Can I forfeit the lease for non-payment of rent?

No, not without permission of the Court or consent of the administrator.

What can I do?

You can pursue a guarantor or former tenant, and/or you may be able to (subject to its terms) draw down from a rent deposit. You may also be able to divert rent from a sub-tenant. However, these steps may be challenged by the administrator.

During the moratorium period either the permission of the court or the consent of the administrator is needed before a landlord is allowed to sue for rent, exercise CRAR or forfeit the lease.

Please note the above does not cover the temporary restrictions in place at the time of writing preventing landlords taking certain steps to enforce their rights.

Key terms

Administrator: Insolvency practitioner appointed by the company directors, the company itself, its creditors or the Court.

Statutory moratorium: Prevents enforcement action against the tenant (e.g. enforcement of security, all legal process and the right of forfeiture by peaceable re-entry) without the consent of the Administrator or leave of the Court.