Forfeiting a lease while in administration

Here we take a look at whether or not you can forfeit a lease during administration.

When a business enters administration, creditors are generally prohibited from taking enforcement action that may prejudice the administrator’s ability to realise the value in the business or its assets for the benefit of all creditors.

This suspension prevents a landlord from forfeiting a lease or from recovering the rent arrears under common law distress or by obtaining judgment.

Are there any exceptions to the rule?

Yes, a landlord may make an application to the court to allow it to exercise a right to forfeit.

The court will take into consideration whether the action proposed will impede the achievement of the purpose of the administration (i.e. to realise the value in the business).

The courts will generally balance the contractual rights of the landlord against the aims of the administrator as a representative of all creditors.