In his latest legal update, CooperBurnett LLP partner Tom Lumsden takes a look at what happens if a care provider who operates under a lease becomes insolvent
What would happen if a provider, which operates a care home under the terms of a commercial lease, becomes insolvent? By insolvent, for the purposes of this article, that means bankruptcy - in the case of an individual or individuals who are the tenants - or liquidation in the case of a company that is the tenant.
When a company tenant goes into liquidation, or individuals are made bankrupt, the liquidator or the bankrupt’s trustee in bankruptcy, as the case may be, is allowed to disclaim any interest of the company or the individual, which that company or individual has in any ‘onerous property’
A liquidator who disclaims a lease would, by doing so, end any ongoing obligations of the insolvent tenant relating to the property. The ending of those obligations takes place with effect from the date of the disclaimer notice. It is less clear what happens to the rights of other parties who have an interest in the disclaimed property
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