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Insolvency

The following matters are dealt with on this page:
  • Administration - can a landlord commence proceedings against the tenant?
  • Rent payable as an administration expense.
  • CVA prejudicing the landlord - Powerhouse
  • .
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Administration

Can a landlord commence proceedings against the tenant?

Innovate Logistics Limited (in administration) v Sunberry Properties Limited
[2008] EWCA Civ 1321

Summary

In considering leave (under the Insolvency Act 1986) to commence proceedings against a company in administration the court must balance the need of the administrators to conduct the administration in the interests of all the creditors against the interests of individual creditors. It is for the applicant seeking leave to show that it is equitable for him to be given leave.

Facts

Innovate Logistics (T) is the tenant of premises under a thirty year lease dated 18 December 1998. Sunberry Properties (R) is the landlord. Rent is payable quarterly in advance at a rate of £1,225,530 pa. The lease also contains a covenant against assignment and parting with possession or occupation of the whole or any part of the premises, together with a proviso for re-entry for breach of covenant, non-payment of rent and on the passing of a resolution of the T’s directors to present a petition for an administration order in respect of T.

On 30 June 2008, T went into administration. On the same day, T’s administrators entered into a sale of T’s business as a going concern. One of the underlying purposes of the sale was to ensure that outstanding contracts could be fulfilled and existing book debts recovered at full value, for the benefit of all the creditors. The lease was excluded from the sale, but the administrators granted the purchaser an occupational licence of the demised premises for 6 months, with monthly payments (equal to the monthly passing rent under the lease) payable by the purchaser to T. The administrators agreed to pass these payments to L.

L asked the administrators to terminate this illegal licence and they refused. Under paragraph 43 of Schedule B1 of the 1986 Act, where a company is in administration,
    "(6) No legal process (incl ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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