Q&As

Where a company in liquidation owns both the freehold and a sublease of a property, can the liquidator disclaim the sublease without disclaiming the freehold?

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Published on LexisPSL on 27/04/2021

The following Property Disputes Q&A provides comprehensive and up to date legal information covering:

  • Where a company in liquidation owns both the freehold and a sublease of a property, can the liquidator disclaim the sublease without disclaiming the freehold?

Where a company in liquidation owns both the freehold and a sublease of a property, can the liquidator disclaim the sublease without disclaiming the freehold?

Liquidators are able to disclaim onerous property (see section 178 of Insolvency Act 1986 (IA 1986)). The liquidator may disclaim unprofitable contracts or property that is not readily saleable or may give rise to a liability to pay money or undertake an onerous act. For further reading on what constitutes onerous property (and therefore capable of being disclaimed), see Practice Note: What is considered onerous property or contracts?

Reported cases involving the disclaimer of freehold property are comparatively rare. However, it has been accepted in a number of cases that freehold property is capable of falling within the definition of 'onerous

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