Q&As

A company in administration has sold assets including a leasehold property to a purchaser. The landlord has refused to consent to an assignment of the lease. Can the administrator sublet the property to the purchaser and if so, will the administrators be required to keep the tenant company ‘alive’, will the administrators be required to pay rent for the property as an expense of the administration, and can the administrators move to liquidation and disclaim the lease?

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Published on LexisPSL on 24/04/2019

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • A company in administration has sold assets including a leasehold property to a purchaser. The landlord has refused to consent to an assignment of the lease. Can the administrator sublet the property to the purchaser and if so, will the administrators be required to keep the tenant company ‘alive’, will the administrators be required to pay rent for the property as an expense of the administration, and can the administrators move to liquidation and disclaim the lease?
  • Can the administrator sublet the property to the purchaser?
  • Requirement to keep the tenant company ‘alive’ and to pay rent as an expense of administration
  • Can the administrators move to liquidation and disclaim the lease?

Can the administrator sublet the property to the purchaser?

An administrator can do anything necessary or expedient for the management of the affairs, business and property of the company (paragraph 59(1) of Schedule B1 to the Insolvency Act 1986 (IA 1986)) and this includes the powers specified in IA 1986, Sch 1.

In relation to the sublet of a property, we note that IA 1986, Sch 1, para 17 provides that an administrator has ‘power to grant or accept a surrender of a lease or tenancy of any of the property of the company, and to take a lease or tenancy of any property required or convenient for the business of the company’.

For further guidance, see Practice Note: Roles, powers, functions and duties of an administrator, in particular section ‘The administrator's powers’.

You should check the terms of the lease to understand whether granting a sublease will be a breach of the

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