Business lease etc

Flyright

No, but the OR owns your interest in the lease and that is where they will seek to establish if that has any value.

WhenIam64

A lease is a contract for future payments at a rate determined at the start for a period of time. That has a cash value to the owner who has offered it to you in return for occupancy rights. He gets the promise of cash. You get the premises. He can't get you out until the contract finishes. You can't stop paying. So there is a potential debt.

To balance the books so to speak there must be a counterbalancing asset. How that asset is valued is based on the value of someone taking on a similar property for a similar time. So lessees have the option of taking out a fresh lease at £2x or taking over an existing lease like yours for £1x plus a premium. That premium is the asset's value.

It may be there is no value in the lease, but the contractual promise to pay has a value which will then be the debt. So to crystallize the debt for BR purposes, you need to value both the promise to pay and the premium.

TheGardener

I see - sort of. So this is because the OP has a lease rather than just a rental tenancy? If the OP has a lease then in theory the OR could get someone else to use the unit and pay the rental/lease to the OR because the 'debt' is to the leaseholder and is included in the BR? I can see why the OR is saying he may have to stop trading - not because he can't trade as such - but because the OR may not make allowances within the SoA to pay the rent/lease and the unit may be being used by someone else?

Simontheframer

If the OR doesn't allow my business rent to be included in my SOA then I don't have a business and they won't get anything back from the IPA as I won't be earning anything. Surely it's in the OR's interest to get back as much money as possible to pay back to the creditors?. I'm assuming (because I don't know and am waiting for advice) that I will average out my business income over the last twelve months and that my outgoings will include all personal and business expenditures, ie materials purchased and rental of workshop?

WhenIam64

If the OR doesn't allow my business rent to be included in my SOA then I don't have a business and they won't get anything back from the IPA as I won't be earning anything. Surely it's in the OR's interest to get back as much money as possible to pay back to the creditors?.

You've got that back to front. The OR's job is to get back as much money. If keeping you in business achieves that aim, it is secondary. He/she has no obligation to keep a property where a premium may be available to contribute to the debt. The freeholder also has rights too and may be able to forfeit as demonstrated in the link at #10.

Lastly allowing you to pay lease rental is no guarantee you'll be able to stay in business as there may be other factors that may cause you to fail.

Suggest you re-look at your business going forward without the current lease.

Simontheframer

Yes, I am looking at that possibility but I still think the likely hood of the OR wanting to take control of the lease is remote. They'll be in a position where they get nothing from me as I won't be earning anything and an empty unit on an industrial estate to try a let out!

WhenIam64

They'll be in a position where they get nothing from me as I won't be earning anything and an empty unit on an industrial estate to try a let out!

Not your problem. The lease will be gone. The freeholder may get a windfall but it is up to the OR to see that this does not happen. Hence the calculation of asset value.

BR is a clean break. Best to leave your past efforts in the past. Securing a new lease with you financial record will be an issue, so best put your mind to that.