The High Court has recently confirmed in Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) that a liquidator of a landlord company has power to disclaim a lease, thereby terminating the landlord’s liabilities and the tenant’s rights under the lease.
Following such a disclaimer, the tenant would then be left to prove its loss as an unsecured creditor in the winding up of the landlord company.
This decision is likely to impact upon the commercial value of a lease, especially where the tenant has granted a general security interest (previously known as a fixed and floating charge) over its business.
The High Court did not decide whether a liquidator must seek the approval of the court before disclaiming a lease. Nor did it decide on what grounds leave to disclaim might be granted or refused. Consequently, in the absence of any legislative amendments, there is likely to be further litigation in relation to these issues.