Office company bankrupt / acquired, deposit lost?

[Deleted User]

Hi all,

my partner is self-employed and has started renting a room in an office building to work with clients, signing a 12m contract.

Unfortunately, it seems the office company who is renting the room out to her went bust and their properties were taken over by another property company.

That company now called my partner, telling her that her deposit / retainer (2 months worth of rent) has been 'lost' by the old company. They now suggest that as a sign of goodwill, they are willing to give her a discount on her rent in months 8 & 11 and then (again as goodwill) acknowledge the remainder of her 'lost' deposit as actual deposit with them if she decides to prolong her contract with them after 12 months.

To me, this seems extremely dodgy and I think she should not agree to this, but insist that they acknowledge all of the deposit right now. It seems like an unfair sales tactic to get her to sign an extension (which may be at a higher price) and I would have strongly assumed that as a default, if you acquire another companies assets, you would also acquire their liabilities (like my partner's deposit).

Has anyone been in a similar situation and would know how to react?

Thanks a lot!

AdrianC

This is a commercial tenancy?

VERY different situation to residential. Much less regulated.

And, no, taking over certain assets of a defunct company does not necessarily imply taking over other assets or liabilities.

user1977

Deervillage said:

I would have strongly assumed that as a default, if you acquire another companies assets, you would also acquire their liabilities (like my partner's deposit).

You assume wrongly - who would take over from a bankrupt company if they had to take on all of their debts? It's the assets which are actually worth something which get picked up by the successors.

[Deleted User]

Thank you for the feedback. 
Seems shocking that a company can just make off with your deposit and then someone else swoops in to take the same rent, but pretends like you've never paid a deposit, but guess that's business.

AdrianC

Deervillage said:

Thank you for the feedback. 
Seems shocking that a company can just make off with your deposit and then someone else swoops in to take the same rent, but pretends like you've never paid a deposit, but guess that's business.

Except that's not what's happening, is it?

The new landlord is offering to give a rental discount for two of the first twelve months, then credit the remainder if she re-signs after month 12.

As far as the original deposit goes, they haven't "made off". They've gone under. She's an unsecured creditor, for whatever that might be worth.

Given that your partner runs a business herself, she really needs to understand such basic concepts.

diggingdude

I would have thought your partner would be a creditor, they will be at the back of the queue so might be better to take the offer 

[Deleted User]

Thank you. I don't agree with your idea that someone who is just getting started with providing psychological counselling needs to understand how creditors are served when an office company goes under, but I appreciate the content of your help. 

GDB2222

I don't know whether the advice given above is correct.

The new company took over the building with the benefit of the existing leases. (I assume the receiver of the old company did not write to your wife disclaiming her lease.)  The leases include obligations concerning the deposit and prepaid rent, as well as the right to receive future rents.  

HOWEVER, there's a big practical issue. I assume that your wife may have paid a few hundred pounds up-front. To dispute what's being offered, you really need legal representation, which could cost more than the money at stake. You could try the CAB, for free advice. And/or, you could try sending a strongly worded letter to the new company, to see what you can get. 

In other words, I suggest that you negotiate, but, in the end, it's almost certainly not worth 'going legal'.

Many people are working from home, so the new company is probably keen to keep your wife as a tenant. You may find that she's in a stronger negotiating position than you imagine. After all, there must be a reason why the old company went bust.

AdrianC

Deervillage said:

Thank you. I don't agree with your idea that someone who is just getting started with providing psychological counselling needs to understand how creditors are served when an office company goes under, but I appreciate the content of your help. 

The nature of her business is irrelevant. This is the basics of trading.