We are hoping to take on new premises that are currently occupied by the administrators of the previous failed tenant. They will not give an indication of when they intend to leave and this is holding up our own plans. Is there anything we can do to force the administrators to tell us when they will vacate the premises?
Moving to new premises is always stressful, and having to wait for an administrator to vacate is only going to compound the matter. This is increasingly common and can take quite some time to resolve.
Administrators have a special status, which means that there is a statutory moratorium on action against an administrator. The landlord of your future premises will not be able to forfeit the lease or get vacant possession in the normal way. This is to allow the administrator enough time to try and sell the business as a going concern, and with retailers in particular the period of administration is quite often used to get rid of as much stock as possible. That does mean that timings will depend on how well the retail premises that you are waiting to occupy are performing and how much stock still remains to be sold.
The administrator will also be trying to get a premium for the lease, rather than just giving the premises back to the landlord. Often, the only way to hurry an administrator out of premises is to offer a small premium for early vacation. Otherwise you will need to wait patiently until all the stock is sold and the administrator hands the premises back to the landlord who is proposing to grant you the lease.
If the administrator is not amenable to a premium and time is critical, it is possible for the landlord to apply to the court for permission to forfeit. This may be a costly procedure and could take just as much time as waiting for the administrator to disclaim the lease.Providing forfeiture is not detrimental to the administration, permission will probably be granted, otherwise the court will balance the interests of the landlords and other creditors, with priority being given to proprietary interest creditors over unsecured creditors. Even if permission is granted and the landlord subsequently forfeits, the administrators can still apply for relief from forfeiture.
In the meantime, you and your landlord need to ensure that the administrator does not assign the existing lease elsewhere.
This article originally appeared in the Financial Times Business Questions on Saturday 1st November 2014.