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The tenant entered into a commercial lease in 2013 knowingly…

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The tenant entered into a...
The tenant entered into a commercial lease in 2013 knowingly he was an undischarged bankrupt. The landlord was unaware of this. In 2017 court proceedings were issued to recover arrears due to unlawful termination of the lease. What is the position of the business lease signed in 2013? Is it legal?
Submitted: 4 months ago.Category: UK Property Law
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Answered in 10 hours by:
3/12/2018
Solicitor: JimLawyer, Senior Associate & Consultant replied 4 months ago
JimLawyer
JimLawyer, Senior Associate & Consultant
Category: UK Property Law
Satisfied Customers: 610
Experience: Senior Associate Solicitor and Litigator
Verified
Hello, the undischarged bankrupt wouldn’t have been bankrupt at the date of signing or entering in to the contract but it really depends on whether the lease has a provision for termination or invalidity upon the insolvency of one or both parties.A typical clause which would trigger this would be:“This Agreement shall terminate, without notice, (i) upon the institution by or against either party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of either party’s debts, (ii) upon either party making an assignment for the benefit of creditors, or (iii) upon either party’s dissolution or ceasing to do business”.Is there any provision such as this? If so then the lease could be invalid but as I haven’t seen the terms of the lease it’s difficult to advise further. Normally most contracts have a provision for this though so there’s a good chance yours would also have this.I hope this helps. Please let me know if you have any further queries and if not please click accept answer.Best wishes,J
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Customer reply replied 4 months ago
Thank you. He was undischarged bankrupt a long time before he signed the lease. What effect does this have on him entering into a business lease
Solicitor: JimLawyer, Senior Associate & Consultant replied 4 months ago

Hi, if undischarged, he is not actually bankrupted at that stage however is in the process of being bankrupted.

As such, it falls to the terms of the lease whether the lease was validly executed or not. If you have a copy of the lease I can check but it sounds to me like the lease was not validly executed given that person's status.

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Customer reply replied 4 months ago
I attach a copy of the lease without parties names.Are you saying that court proceedings can also be issued against the tenant as his position of being an undischarged bankrupt has not changed since before he signed the lease?
Solicitor: JimLawyer, Senior Associate & Consultant replied 4 months ago
Hi, I’ve checked the lease - if you check the hearing “Forfeiture”, it confirms the lease ceases if the tenant is bankrupt or becomes insolvent. Normally the tenant would be dealing with a Trustee in Bankruptcy who deals with their creditors and financial affairs ultimately leading to becoming “discharged” as a bankrupt. If you know who the trustee in bankruptcy is, you can speak to them and register a debt against the tenant. If you don’t know who the Trustee is, you can search on www.insolvencydirect.bis.gov.uk and locate them. I presume you would need the location of the tenant’s local bankruptcy office so if you know where the tenant lives or did beforehand you should be able to find this out.Hope this helps.Kind regardsJ
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Customer reply replied 4 months ago
I understand that but this clause would take effect after the execution of the lease not before. My questions relate to the tenants position and the status of the lease which has been signed when the tenant was an undischarged bankrupt
Solicitor: JimLawyer, Senior Associate & Consultant replied 4 months ago
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