By Marcus Leach

In these gloomy economic times tenants and in particular, retail tenants may be struggling, but ready to utilise the festive sales boom to soften the blow of failing.

Carmela Inguanta, partner and head of the Real Estate Group of top 70 UK law firm SGH Martineau LLP offers some timely advice to Landlords who may be about to receive an unwanted Christmas present from their tenants.

“The run up to Christmas and the New Year sales might be the final chance for an ailing business to collect cash, either to see it spirited away or used to pay off bank borrowings and thereby reduce personal liabilities of the directors," she said.

“With the rent quarter day approaching on 25 December, landlords can expect to receive Notices of Intention to Appoint Administrators on or around 23 December.

“This will mean that landlords would be unable to take any steps against defaulting tenants because they would be prevented by the moratorium that arises when such notice is given.

“A well advised tenant may well renew the Notice of Intention to Appoint an Administrator early in the New Year which will then take the tenant safely past the time when the business will benefit from the New Year sales, allowing the tenant to shut up shop on or about 20 January.

“Many landlords may be aware of the case of Goldacre, but that is not a Judgment that will help in these circumstances. Rent will be payable on 25 December. The administrator will assume control towards the middle of January and it will not be until the commencement of the March quarter that an administrator could be required to make rent a cost of the administration. And at that stage the business will most likely have moved on.

“Any landlord who does nothing until the appointment of the Administrator on or around 20 January is likely to receive nothing towards the outstanding rent.

”Any landlord receiving a Notice of Intention to Appoint an Administrator as Christmas approaches, where the tenant’s premises are well stocked should seek legal advice and consider an emergency application to the court to lift the moratorium and provide the well advised landlord with the ability to either forfeit or levy distress.

“My advice is simple; Christmas is coming, but landlords must stay focused. They must not get into the festive spirit too early and keep working right up to the end of Christmas Eve and be prepared to act quickly.”

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