What we do

Insolvency

The following pages are designed to assist landlords understand the insolvency processes they may be faced with.

We have developed a number of simple but effective tools to enable landlord organisations to gain clarity from administrators should they be faced with the administration of a tenant.

Pre-packaged administrations

A pre-packaged administration is a fast-track administration that avoids a failing business being sold on the open market, with all the attendant problems this normally entails.

Instead, an insolvency practitioner lines up in advance a purchaser to take over the business, or parts of it, with the company going into administration simultaneously. This method maximises the realisations from the estate as it avoids any loss of value from a deterioration in the goodwill of the firm.

Pre-pack administrations work best for the secured creditors of a business on sale or administration, with the unsecured creditors (including landlords) often having limited redress when the unwanted parts of a failing business are shaved off and dissolved. For landlords, it is often the case of quality first, with the 'good' profitable assets being taken into the new vehicle, and the 'least' profitable secondary assets being dropped.

For those landlords who have had their properties dropped, it is the lack of clarity in the pre-pack process and the high costs, not to mention legal obstacles, to challenging a pre-pack administration that are of principle concern. For the landlords whose properties are included in the new vehicle, the advent of pre-pack administrations can sometimes be used as an opportunity by the 'new-co' to renegotiate the terms on existing leases to bring about a drop in rent or introduction of rent free periods irrespective of the terms of the existing lease agreement. Neither of these circumstances are desirable for landlords.

The BPF position on pre-pack administrations

Drawing a policy line on pre-pack administrations is difficult, as the circumstances of each case determine whether a landlord either benefits or loses out from a pre-pack administration. We felt it would be unhelpful, therefore, to have a general policy line as it is only possible to evaluate the 'benefit' or 'disadvantage' of a pre-pack administration on an individual, case by case, basis.

However, we continue to monitor the market for 'legitimate use' and 'abuse' cases of pre-pack administrations, and will be vocal where landlords have been genuinely 'abused' by the pre-pack process.

We also wish to draw your attention to the Insolvency Service's Statement of Insolvency Practice (SIP)16 and the BPF SIP 16 questionnaire which is designed to assist landlords obtain information from administrators following a pre-pack administration.

Statement of Insolvency Practice (SIP) 16: pre-packaged sales in administrations

The Insolvency Services' Statement of Insolvency Practice is one of a series of guidance notes issued to Insolvency Practitioners (IPs) to maintain standards. It sets out the basic principles and essential procedures which insolvency practitioners are required to comply with when undertaking the pre-packaged sale of a business.

It is also designed to give full and clear disclosure to creditors as soon as possible after the pre-pack transaction has taken place. A report on the the first six months operation of SIP 16 is also available.

BPF SIP 16 questionnaire

Landlords are likely to have many questions to ask administrators following the announcement of a pre-pack administration, in particular whether the insolvent tenant's lease has been assigned (without consent) to the buyer.

The BPF SIP 16 questionnaire is based on the SIP 16, and contains many of the questions an administrator should be expected to answer at an early stage following the sale of an insolvent tenant's business. The answers received will help a landlord to make decisions regarding how to treat the occupier.

BPF press release: Landlords demand pre-pack answers

BPF press release: Landlords vow to protect savers as Allied Carpets calls in administrators

Company Voluntary Arrangements (CVAs)

A Company Voluntary Agreement (CVA) is a rescue procedure for a company in financial difficulties. It offers a legally binding agreement between a company and its preferential and unsecured creditors to repay a proportion of the company's liabilities.

The purpose of the CVA procedure is to allow companies to avoid liquidation by coming to an informal yet binding agreement with its creditors, and avoid other forms of formal insolvency procedures.

CVAs have a significant impact on landlord organisations. As a means of explaining the CVA process, we have produced a guidance paper which includes a level of information on how creditors can influence the fees charged by insolvency practitioners undertaking a CVA.

BPF press release: Landlords back Focus CVA to save 5000 jobs

BPF press release: Landlords positivity seeks JJB sport pass CVA

Insolvency contacts page

The insolvency of occupier businesses can come as a shock to many landlord organisations.

As a means of facilitating communication between landlords on insolvency issues, we have brought together the names and contact email addresses of the specialist insolvency contacts at the thirty largest landlords.

This will, hopefully, make communication on this subject easier between landlord organisations.