Managing Tenant Insolvency: A Landlord Guide

A tenant becoming insolvent is one of the hardest situations a commercial landlord faces. What you can do depends entirely on the type of insolvency, and timing matters.

The main insolvency types

• Company voluntary arrangement (CVA): the tenant proposes a deal with its creditors that can compromise rent and other debts. Landlords may be bound by it but can, in some cases, challenge a CVA that treats them unfairly.
• Administration: a moratorium applies, so you generally cannot forfeit or use CRAR without the administrator's consent or the court's permission. Where the administrator continues to use the premises, rent is generally payable as an expense of the administration.
• Liquidation or winding up: the company is being wound up. A liquidator can disclaim an onerous lease, ending the tenant's liability, and peaceable re-entry may be available depending on the circumstances.
• Moratorium under CIGA 2020: a standalone moratorium giving breathing space, during which ongoing rent must generally be paid.

Your priority actions

• Draw on any rent deposit promptly, ideally before an insolvency process bites.
• Pursue guarantors and, on older assignments, any former tenant or AGA guarantor.
• Register as a creditor so you are in the process.

Take advice fast

The rules differ sharply between insolvency types, and a wrong step, such as forfeiting when a moratorium applies, can backfire. Take legal advice as soon as insolvency looks likely. See forfeiture.

Can I forfeit if my tenant goes into administration?

Generally not without the administrator's consent or the court's permission, because a moratorium applies. The rules differ sharply by insolvency type.

What should a landlord do first when a tenant is insolvent?

Draw on any rent deposit promptly, pursue guarantors and former tenants, and register as a creditor.