Bankruptcy and business lease

elljay

I think fairly soon I will have to go bankrupt due to spiralling costs of running my business. However I have a 5 year lease on the premises with around 3 years still to run. I have discussed early release with the landlord but he won't hear of it.

I can't assign the lease as anyone who takes over would have similar outgoings and so much work is needed on the premises internally that it couldn't be profitable for years, and there is no break clause. Subletting would bring the same problems, work needed before profit comes in and the rates, utilities, insurance etc will still climb.

If I were to go bankrupt, would the landlord have to release us from the lease or would that still hang over me? Arrears to him are only a months rent at the moment but other arrears are building up (rates etc) and I can see the business operating for only another month or so now.

Basically what's the worse that can happen?

Thanks

LJ

antrobus

The simple answer would be that, if you were to go bankrupt, your landlord would simply be another creditor obliged to prove his debt in the bankruptcy.

As far as the lease itself is concerned, that will become the property of the OR. If the OR sees no value in the lease, they are likely to issue a disclaimer and that will be the end of that.

paddyrg

Bankruptcy is a big step - before you decide to do that, could you try talking to the landlord again and tell them you are going to be forced into bankruptcy and that will mean he joins the queue. If he wants to reconsider a break clause now for a few months time (say) he'll get paid something at least and not have the hassle.

He might wake up and get smart and take something sure over guaranteed nothing

elljay

Thank you both for such helpful answers. I'm ringing Business Debtline in the morning but still need good information just to ask the right questions!

LJ

COOLTRIKERCHICK

are you a ltd company? do you own your own home? do you have any private assets?

elljay

COOLTRIKERCHICK wrote: »

are you a ltd company? do you own your own home? do you have any private assets?

No to all three! Sole trader, rented house, only asset is car.

COOLTRIKERCHICK

elljay wrote: »

No to all three! Sole trader, rented house, only asset is car.

is the car owned outright? what car is it? worth??

Ok... so basically the only thing that potentially you would lose is your car. and any personal belongings that are not essential, and the bailiffs think the could sell to raise money to try and pay off your creditors.. this would be things like new-ish TV's gadgets etc...

You will potentially be 'black listed' for up to 6 years..



I don't think the landlord will be able to hold you to the outstanding lease, BUT you need to check your lease first... did you have a gaurentor sp? basically someone to honour any owed payments... as sometimes there is a clause in the lease which covers this, so basically the landlord is paid whatever...

I Would make an appointment with CAB first, and take a copy of your lease with you, before you do anything... as you really do need to go through your lease first