A new lease of life—lessons for administrators following SSRL—Re SSRL Realisations Ltd (In Administration)

A new lease of life—lessons for administrators following SSRL—Re SSRL Realisations Ltd (In Administration)

Blair Leahy, barrister at 20 Essex Street Chambers, explores the decision in Re SSRL Realisations Ltd and the lessons for administrators when faced with a dispute over a lease in the context of administration.

Original news

Re SSRL Realisations Ltd (In Administration) [2015] EWHC 2590 (Ch), [2015] All ER (D) 74 (Sep)

The applicant landlord applied for permission to forfeit the lease held by the fourth respondent tenant, which was in administration, by peaceable re-entry. The Companies Court, in allowing the application, held that the purpose of the administration would not be impeded by granting the landlord permission to pursue its proprietary rights and that there was no identifiable purpose of the administration which would be served by limiting the landlord to seeking forfeiture by legal proceedings, rather than by peaceable re-entry.

What were the facts of the case?

The case involved an application by a landlord relating to a lease of a prime Brunswick Centre property where the tenant, SSRL Realisations Limited (SSRL), has been in administration since September 2014.

The administrators had sold the business and assets of SSRL to a third party (Newco) and had also given Newco a licence to occupy, and trade from the property pending an application for consent to assign.

The administrators applied for consent to assign to Newco in October and November 2014, and those requests were refused on the basis that Newco was a newly-formed company with no covenant strength.

When the administrators nonetheless refused the landlord consent to forfeit, the landlord issued an application for permission to forfeit under the paragraph 43 of Schedule B1 to the Insolvency Act 1986 (IA 1986).

Shortly before the final hearing of the application, the administrators said that they needed more time to:

  • remove Newco from occupation
  • have an opportunity to market the premises, and
  • assign the residue of the lease to an acceptable assignee

They also said that the lease was worth around £650,000 and that they had very recently identified a potential assignee.

What were the main legal arguments arising?

The landlord’s application was made under IA 1986, Sch B1, para 43 for permission to forfeit, and the issue was whether permission should be given. It was a relatively short point requiring the application of the principles laid down in Re Atlantic Computer Systems plc [1992] 1 All ER 476

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.