Formal insolvency proceedings

The complex statutory background to insolvency procedures means that a number of enforcement rights, which are readily available in a solvent context, are either not available during an insolvency process or require specific authorisation.

There has been a recent trend for tenants in the retail and leisure sectors to seek to use insolvency legislation (and the specific protection it affords tenants) to restructure their businesses by forcing the renegotiation or effective removal of unprofitable leases from their trading estate – principally by using a 'pre-packaged' administration sale or a company voluntary arrangement.

These processes can effectively rewrite or extinguish unprofitable leases and they have caused a good deal of friction with those landlords, who consider they have been consequently disadvantaged. Where practitioners are confronted by such procedures, it is important that their clients also seek specialist legal advice.