Death of a sole trader ... and debt

petomam

Hello could anyone please advise
My brother in law ..sole trader garage.. had died  left no will and his personal representative is his  23 years old son... only child
The landlord of the business unit is looking for the remainder 4 years of the lease agreement.. this will equate to around 52 thousand pound
we fully understand that all debts of the sole trader pass to my nephew , however he worked at the garage and is now unemployed , he lives with his mum (in her own home ) who has split from his dad 18 month before his death (they were also never married) ... so , can he be expected to pay this debt.
The garage unit still contains all of his fathers assets i.e. plant and machinery ... He cannot afford to get them removed to sell them ... these would still not cover the debt 
does anyone know how my nephew stands legally regarding this debt 
Also , if the landlord decides to rent this unit out to someone else ..can he still be chased for money etc
thanking you in advance for any assistance

kazwookie

You need to get some legal advise, I would have thought unless the son's name is on the lease then it is nothing to do with him, including any debt, the LL needs to contact the executor of the WILL or who ever assumes responsibility.

Keep_pedalling

No the father’s debts do not pass to the son, debts are owed by the estate and if there is not enough to cover them then the estate is insolvent and the son should simply walk away. 

If there are sufficient assets to cover any debts then the son should administer the estate. 

Marcon

petomam said:

we fully understand that all debts of the sole trader pass to my nephew , 

Why do you say you 'fully understand' this? They certainly don't, if his dad was a sole trader, and the son didn't give any personal guarantees or co-sign anything to do with the lease.

The landlord may well like the idea of getting another four years' rent, but it won't be that simple. The son needs to get some proper legal advice (many lawyers will do a fixed fee interview online) before doing anything at all.

Savvy_Sue

If there's no will, then the son just says "no-one is administrating the estate" and if the landlord wants to do so, he can go right ahead. But yes, definitely talk to a solicitor. 

Keep_pedalling

Marcon said:

petomam said:

we fully understand that all debts of the sole trader pass to my nephew , 

Why do you say you 'fully understand' this? They certainly don't, if his dad was a sole trader, and the son didn't give any personal guarantees or co-sign anything to do with the lease.

The landlord may well like the idea of getting another four years' rent, but it won't be that simple. The son needs to get some proper legal advice (many lawyers will do a fixed fee interview online) before doing anything at all.

If the estate is actually solvent and the deceased had a long term lease then the obligations of that lease do fall on the estate. The OP mentions a house so if his father owned a share in that there could be a significant problem, and as you say they should seek professional advice. 

getmore4less

As well as urgent advice on the estate management of a sole trader. 

Was business viable and something the son could continue. 

Robert_McGeddon

petomam said:

Also , if the landlord decides to rent this unit out to someone else ..can he still be chased for money etc
thanking you in advance for any assistance

The landlord can't rent elsewhere AND claim rent from the estate.

The debt is potentially £52K. But this is over several years and if the lease is terminated, whether by default or agreement , it is unlikely the full £52K would count as a debt on the estate. You may be looking at £5-10K for missed/upcoming rent instalments. If this £5-10K is lower than assts in the estate then it may be solvent and leave something to be inherited.

Provided the estate is solvent (based on the above assumptions)  your best option is to sell the business as a going concern. Second best is agree with landlord to terminate the lease for a small sum so he can lease it elsewhere and there is no ongoing liability to the estate. BUT if the estate is insolvent, even on the lower lease obligations, the nephew (or indeed anyone) would be unwise to do anythig that might be seen as administering it.

As others have said, seek professional advice - could be solicitor or BiL's accountant.

Marcon

Keep_pedalling said:

Marcon said:

petomam said:

we fully understand that all debts of the sole trader pass to my nephew , 

Why do you say you 'fully understand' this? They certainly don't, if his dad was a sole trader, and the son didn't give any personal guarantees or co-sign anything to do with the lease.

The landlord may well like the idea of getting another four years' rent, but it won't be that simple. The son needs to get some proper legal advice (many lawyers will do a fixed fee interview online) before doing anything at all.

If the estate is actually solvent and the deceased had a long term lease then the obligations of that lease do fall on the estate. The OP mentions a house so if his father owned a share in that there could be a significant problem, and as you say they should seek professional advice. 

Depends on the lease - could have a break clause, may permit sub-letting...various reasons why the estate may not end up having to fork out and why urgent legal advice is necessary.

Robert_McGeddon

OP, having thought about this again I think approaching your BiL's accountant is the key step. He should know about the lease, the business profitability and have contacts for selling the business as a going concern.