Leases landlords bankruptcy and options

LeasePressure

Hi All,

Was unsure where to post this but thought this board looked the best bet...

I currently own a business as an outside work venture (as i have a full-time job). The business leases a premises (this is under my name and not an limited company). I have been using a lot of my own money to sub the business for nearly a year now through the recession but am now losing my full time job due to redundancy (the package i am receiving is equal to about 2,500). I have spoken to the landlord about terminating my lease as i can no longer afford to trade but there is still 7 years left to run. Meaning i am liable to pay the Landlord £70,000 in future rent payments. The landlord is understandably therefore not happy to just let me walk away. The business has been on the market for several months but has attracted no buyers. I am now defaulting on my rent. Me and my partner own a house worth around 170,000 but have 160,000 mortgage i have no other real assets except my car worth around 2,000 which is vital for work. I also have debts of over 34K through overdrafts, loans and credit cards.

My question is really would it be worth my landlord forcing me into bankruptcy?

Would he be likely to terminate the lease (obviously he would keep the deposit (6 months rent) and chase for the arrears)?

I have put the latter option on the table as i think it would be the best for both of us as i don't think he will recover anywhere near 70K from my assets especially when this is split between my other creditors which are all high street banks. But as yet have just received stalling answers.

Any help comment or discussion around this matter would be very much appreciated as i do feel very lost and very alone. I understand i have got myself into a silly position but really would like any help in keeping the roof over me and my partners heads.

Thanks

GotToChange

I don't know much about this kind of thing but didn't want to read and run; don't feel alone, I'm sure there will be someone to give you advice far better than mine along soon.

Is there no wriggle-room at all in this lease? This seems like the worst of all scenarios - to be in future debt... not nice. But it must be deal-able with in some way, I'm just not knowlegable enough to know how. The fact remains that your LL should be aware that "making you" BR for that sum, doesn't actually mean he would get the money. If your assets total say £10,000 and your creditors totalled £100,000 and he was owed the most, he would still only get max *70% of your "estate" when liquidated - and that's after the OR has taken their 2 grand chunk.

Is going BR what YOU want?

*Guessing here...

LeasePressure

Thanks gottochange.

To be honest i would prefer not to go bankrupt but feel it may be the only way out of the lease.

Plus with my other debts mounting and my income stopping i will be going into a DMP (with cccs or payplan) or an IVA in any case. I don't believe the landlord will agree to a DMP or IVA (and he is the largest of the creditors on paper) so believe bankruptcy is the only other option. However i am scared as i work in the financial services and i understand that bankruptcy is not looked on too favourably and i dont want to jeopardise my chances of finding employment again. I am trying to gather as much info as i can from the HR dept while i am still here on the matter. The other major concern is loosing the house. The worse scenario would be to be unemployable and homeless............

Thanks

GotToChange

It need not come to that I'm sure.

Either way the LL isn't going to get his money - his making you BR will not mean that you have a bigger estate to liquidate. And with that in mind, I would hesitate when considering your own BR as there are implications for your wife if she doesn't go BR but there are joint debts, i.e. the mortgage (although this can be a good thing).

Is the LL relying on the business being sold for his money (who on Earth ties someone into a 10 year lease these days?) - in which case, he'll just have to sweat it out. You going BR does not mean that there is more available for him; so it would be a case of him getting very little if you go BR (him being the biggest creditor doesn't make more money available) or waiting - quite possibly indefinitely - for a share of the proceeds when your business is sold. Is there a way for the property to be available for him to let again, thus mitigating his "losses" ? (I still struggle with the thought of debt in the future.)

You are right to find out all you can re. BR's after effects on your future employment prospects. If it helps, I spoke to the AAT the other day and they do look at it on a case-by-case basis.

x

LeasePressure

Thanks gottochange

I am to worried about the profesional bodies i.e. UKSIP and SII etc or indeed being FSA regulated but more about the recruiting policies of the banks.

Thanks for all you help .... anyone else on here been in a similar situation?

Reviva_UK

hi

depending upon the type of business and stock / fixtures & fittings will depend on whether the landlord can gain entry and "distrain" goods to the value of the next quarters rent. Worth checking this out.

Additionally in an insolvency position it is unlikely the the Official Receiver would accept a claim from the Landlord for any more than 1 years worth of rent.

So on the face of it the contingent liability is 70k over the next 7 years but that debt is not due now.

if there any way that the business could support you moving forward - even renegotiating a rent free period from the landlord.

A few years ago Landlords were in control. In the recession with so many places empty the tables have turned.

It is also unlikely that the landlord will push for bankruptcy for a very long time - this solution is only valuable to creditors when "debtors" are frightened and have assets.

If you understand all the options you will not be frightened.

Work through all the options, give your self a time limit to sell the business, get a plan and get your ducks in a row,

Hope this hepls

tigerfeet2006

Also give Business Debtline a ring and have a chat with them about your options. Their link and number are in my signature.

LeasePressure

Thanks very much,

Reviva - thanks also for the info - If the LL did enter the property and take the goods as far as i know this does not mean the lease is terminated (unless he changes the locks on the way out) or as far as i know.

The Business will not be able to support me. We would have to double turnover just to break even ...........

Also as i understand it now my partner can buy my "equity" in the house so would only cost 5k save it.

tigerfeet2006 - thanks for the number I had not heard of them before - i have called them and spoke to an advisor there (they were actually very good) although they were not very optimistic about my situation and also said if there is no insolvency clause in the lease then going bankrupt will not solve the "future debt problem" - However i think i may be able to get around this as defaulting on the lease means i am now liable to pay to the end of the term thus making future debt current debt.

Thanks again