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  • Property Insolvency
Rights of Light, 3rd Edition Rights of Light, 3rd Edition


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Property Insolvency


A comprehensive guide to the law relating to property and insolvency

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The world of property insolvency has evolved through the biggest financial catastrophe since the War, with the bank meltdown flowing from property backed lending. Since the first edition of Property Insolvency there have been significant changes in property enforcement (including the introduction of CRAR), restructuring of many national insolvent retail chains and the unprecedented rise of fixed charge receiverships.

The new edition includes coverage of:

  • Evolution of the administration expenses regime following the cases of Goldacre (Offices) Ltd v Nortel Networks UK Ltd (In Administration) (2009) and Leisure (Norwich)II Ltd and others v Luminar Lava Ignite Ltd (In Administration) and others (2012)
  • The rapid growth of mortgage default, fixed charge receivership together with the enforcement of collateral security (including personal guarantees)
  • The use of Company Voluntary Arrangements particularly in relation to multi-site retailers for example, the Miss Sixty case ((1) Mourant & Co Trustees Ltd (2) Mourant Property Trustees Ltd v (1) Sixty UK Ltd (In Administration) (2) Peter Hollis (3) Nicholas O’Reilly (as joint administrators of Sixty UK Ltd) (2010))
  • The fundamental changes to the principles relating to co-ownership of real property – the Supreme Court’s decision in the Patricia Anne Jones v Leonard Trevor Kernott [2011] UKSC 53 developing the ruling in Stack v Dowden [2007] UKHL 17
Recommended reading for corporate restructuring lawyers, insolvency practitioners, commercial property lawyers and property professionals.
  • Introduction
  • Tenant's Insolvency
  • Freeholder/Landlord Insolvency
  • Mortgagees and Receivers
  • Property Assets and Personal Insolvency
  • Property Taxation and Insolvency
  • Appendices
"This book provides a comprehensive and practical guide for lawyers, property and insolvency professionals."
PLC Magazine

"a useful and user-friendly guide ... a comprehensive and practical guide ... a practical tool ... All those professionally involved in this area of law should get a copy"Click here for the full review
 Phillip Taylor and Elizabeth Taylor of Richmond Green Chambers

"a comprehensive guide to both formal and informal property insolvency ... a "must have" book ..."Read the full review
Insolvency Practitioners' Association Magazine

Old tenancy

A surety will normally be discharged following any modification in the contract which he has guaranteed, unless he is a party to the modification (Holme v Brunskill (1878) 3 QBD 495, CA; in relation to sureties, see above).

5.57 Unless there is an express release, the assignment of a lease will not release the surety of the assignor from his liability (Baynton v Morgan (1888) 22 QBD 74).

5.58 In Selous Street Properties Ltd v Oronel Fabrics Ltd [1984] 1 EGLR 50, Hutchinson J held that even if a lease variation significantly increased rental value for rent review purposes such a variation did not discharge the liability of the original lessees. The position of the original lessee’s guarantor was different though and in principle he was entitled to be discharged from liability. This was on the basis of the different rules applicable to a surety as compared with an original lessee (although in Selous there was a specific proviso in the guarantee clause which excluded the guarantor’s release).

5.59 Where there is an express agreement to the contrary, the provisions of any such agreement will be construed restrictively (see West Horndon Industrial Park Ltd v Phoenix Timber Group plc [1995] 1 EGLR 77).

New tenancy

The common law principles relating to the release of a surety discussed above apply equally to sureties and guarantors under new tenancies. Sureties are protected against successive assignments in the same way as their principals. Accordingly the surety will be simultaneously released when its principal is released (the Covenants Act, s 24(2)).

5.61 Finally, the provisions of the Covenants Act, ss 17 and 18 contain provisions for the benefit of sureties of former tenants which provide the same protections afforded to the principals (see above).


Where a lease is forfeited, the forfeiture will have the effect of forfeiting any subleases or other inferior interests granted under the lease that has been forfeited (Official Custodian for Charities v Mackey [1984] 3 All ER 689). This includes the termination of any charge on the lease.

5.63 However, where the head lease is surrendered or disclaimed by a liquidator or trustee in bankruptcy (or by the Crown), the subtenant’s interest will continue and the subtenant holds his interest in land on the same terms and subject to the same rights and liabilities that would have applied had the head lease continued. The sublease will continue for the same term and in any event no longer than the head lease would have if there had been no surrender. Under the Law of Property Act 1925, s 139(1):

‘Where a reversion expectant on a lease of land is surrendered or merged, the estate or interest which as against the lessee [the Head landlord’s interest] . . . shall be deemed the reversion for the purpose of preserving the same incidents and obligations as would have affected the original reversion had there been no surrender or merger thereof.’

5.64 The effect of a disclaimer on a subtenant’s right to continue occupying property is discussed in detail at 7.47 and 7.60.

(The now repealed) Law of Distress Amendment Act 1908

Irrespective of whether the landlord’s tenant was the subject of formal insolvency proceedings or not, at any time (prior to 6 April 2014) where the tenant was in arrears of rent under a head lease, a landlord was able to require any subtenant to pay its sub-rents directly to him by virtue of the Law of Distress Amendment Act 1908 (the 1908 Act), s 6. The 1908 Act was abolished when the Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) came into force on 6 April 2014. Prior to that time, the following procedure applied (the new procedure is set out at 5.71 below).

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