If a tenant company fails to pay its rent when due (subject to any grace periods in the lease) the landlord ordinarily has the right to forfeit the lease either by peaceable re-entry of the property or by legal proceedings. However, if the tenant is insolvent (or soon to become insolvent) then this right may be stayed by the moratorium under the Insolvency Act 1986. The moratorium under the Insolvency Act is a period when creditors may not enforce certain rights against a company in administration.

The moratorium prevents landlords from re-entering the property by peaceable re-entry or enforcing payment of the rent through the courts without the leave of the court or the consent of the administrators. If the exercise by the landlord of his proprietary rights to repossess the property is unlikely to impede the purpose of the administration, then leave should normally be given. In other cases, the court must balance the legitimate interests of the landlord and those of other creditors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.