Some advice please re business lease and limited company

Earl_Hickey

Hello all, I'm a regular lurker on this forum and now wish to ask for some advice please.

My wife and her friend started a business in January which required them leasing a small amount of preparation space plus an office. They signed a 3 year lease with a break out clause at one year.

The business has proven to be a real non starter and they realise they've made a mistake and would like to just walk away from it. The landlord holds a two month deposit which they are prepared to lose but are worried that he can sue them personally for the unpaid rent.

I'm of the impression that as the lease was signed on behalf of the limited company he can only pursue the company (which has no money or assets) and not the directors but I'm no expert and would appreciate the advice of somebody that is. (There are no other debts.)

They have not traded as yet though they have orders for next month but they only amount to half of what the rental will be so they would still be making a loss. They have informed HMRC that the company is presently dormant and if they were to bow out now would have a clear 3 months without trading in order to be able to dissolve the company.

Can anybody offer any advice please?

bris

As long as there are no personal guarantees, then yes they can just let the company go into administration. They should write to the landlord explaining they have made a huge mistake and that he should re let the place asap to minimise his loses. He may be understanding and just let it go. Worst case is he takes the ltd co to court, but there is nothing that can be done personaly to the directors.