Q&As

Company which gave an authorised guarantee agreement (AGA) goes into voluntary, solvent liquidation, but assignee is solvent so no liability has crystallised under the AGA. Can the liquidator disclaim the AGA? Does the landlord have any remedies if the AGA does not have a requirement to replace the guarantor if the guarantor goes insolvent?

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Published on LexisPSL on 31/03/2020

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

  • Company which gave an authorised guarantee agreement (AGA) goes into voluntary, solvent liquidation, but assignee is solvent so no liability has crystallised under the AGA. Can the liquidator disclaim the AGA? Does the landlord have any remedies if the AGA does not have a requirement to replace the guarantor if the guarantor goes insolvent?

Company which gave an authorised guarantee agreement (AGA) goes into voluntary, solvent liquidation, but assignee is solvent so no liability has crystallised under the AGA. Can the liquidator disclaim the AGA? Does the landlord have any remedies if the AGA does not have a requirement to replace the guarantor if the guarantor goes insolvent?

Section 178 of the Insolvency Act 1986 (IA 1986) provides liquidators with the power to disclaim onerous property. This power is not limited to ‘insolvent’ liquidators and also applies to members' voluntary liquidations.

IA 1986, s 178 defines ‘onerous property’ as any ‘unprofitable contract’ or ‘property of the company which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act’. There is a separate provision under IA 1986, s 179 which allows leasehold property to be disclaimed. For further information, see Practice Note: What happens to a lease when the tenant's liquidator disclaims?

We are not aware of any case law confirming

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