Your tenant company has gone insolvent: what happens to the lease, and can it be disclaimed?

In England, Wales and Northern Ireland, insolvency does not usually make the lease vanish by itself; the important question is which insolvency procedure has started and whether a statutory disclaimer power exists. Scotland is different: there is no statutory lease-disclaimer power under administration, liquidation or bankruptcy, so a Scottish office-holder may adopt or abandon/refuse to adopt the lease, but abandonment alone does not end it.

What happens when a company tenant goes into administration?

When a company tenant goes into administration, the lease continues, but the landlord’s enforcement rights are frozen unless the administrator agrees or the court gives permission. In England, Wales and Scotland, administration triggers a moratorium over landlord action against premises let to the company; GOV.UK summarises the effect as: “You’ll be protected from legal action by people or organisations who are owed money (‘creditors’) and nobody can apply to wind up your company during administration.” Northern Ireland has its own equivalent administration moratorium. If the administrator keeps using the premises for the administration’s benefit, rent is normally treated as an expense of the administration for that period: the Court of Appeal stated that the office-holder must pay rent “for the duration of any period during which he retains possession of the demised property for the benefit of the winding up or administration”. In Scotland the landlord’s remedy is irritancy rather than forfeiture, but administration still blocks unilateral landlord action. Abodient can still track the rent due and received for that tenancy through an administration, which matters because rent for any period the administrator keeps using the property is treated as a cost of the administration, not an ordinary claim.

Can an administrator disclaim a lease?

An ordinary administrator cannot disclaim a lease in England, Wales, Scotland or Northern Ireland; disclaimer is a liquidation or bankruptcy power, not a standard administration power. For England and Wales, the Insolvency Act disclaimer section begins: “This and the next two sections apply to a company that is being wound up in England and Wales.” The Insolvency Rules confirm the same boundary: “This Part applies to disclaimer by a liquidator under section 178 (winding up) and by a trustee under section 315 (bankruptcy).” Northern Ireland’s company-disclaimer power is also framed for a company “being wound up”, not one merely in administration. Scotland goes further: there is no statutory power to disclaim onerous leases in Scottish insolvency at all. What an administrator can do is negotiate surrender; Schedule 1 gives the power to “grant or accept a surrender of a lease or tenancy”, which is consensual lease closure, not disclaimer.

What happens to a lease when the company goes into liquidation?

When a company tenant goes into liquidation in England, Wales or Northern Ireland, the lease still does not automatically end, but the liquidator can disclaim it if it is onerous; in Scotland a liquidator cannot disclaim and can only adopt or abandon it. In England and Wales, the Insolvency Act says: “Subject as follows, the liquidator may, by the giving of the prescribed notice, disclaim any onerous property”. Northern Ireland has the same liquidator-disclaimer model. The court-leave rule in compulsory winding-up is a procedural stay on action against the company, not the legal effect of disclaimer itself: after a compulsory winding-up order in England and Wales, “no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court”, but that stay is not the creditors’ voluntary liquidation position. In Scotland, a liquidator may abandon a lease, but the Scottish position is that abandonment “is not to actually bring the lease to an end.”

Can a trustee in bankruptcy disclaim a lease?

A trustee in bankruptcy deals with an individual tenant, not a company tenant: a company cannot be made bankrupt, only administered or liquidated. In England and Wales, an individual’s bankruptcy trustee can disclaim a lease because the Insolvency Act says the trustee “may, by the giving of the prescribed notice, disclaim any onerous property”. Northern Ireland has the same bankruptcy-disclaimer power: the trustee “may, by the giving of the prescribed notice, disclaim any onerous property”. Scotland is different again. A Scottish trustee has no statutory disclaimer power; the Bankruptcy (Scotland) Act 2016 gives the trustee the choice to adopt a contract or “refuse to adopt it.” That distinction matters for a landlord because disclaimer in England, Wales and Northern Ireland has a statutory lease-ending effect between landlord and bankrupt tenant, while refusal to adopt in Scotland leaves the other party with a damages claim rather than a statutory termination route.

What happens to the lease once it has been disclaimed?

Disclaimer ends the lease between landlord and tenant, but guarantors and former tenants can remain bound as if the lease had continued; Hindcastle is the sharp correction to the simplified view that disclaimer just closes the lease for everyone. In England and Wales, the statute says disclaimer determines the bankrupt’s rights and liabilities in the disclaimed property, but “does not, except so far as is necessary for the purpose of releasing the bankrupt, the bankrupt’s estate and the trustee from any liability, affect the rights or liabilities of any other person.” The House of Lords put the point more directly: “Thus when the lease is disclaimed it is determined and the reversion accelerated but the rights and liabilities of others, such as guarantors and original tenants are to remain as though the lease had continued and not been determined.” Loss caused by disclaimer is normally only an insolvency claim: the person affected may “prove for the loss or damage as a bankruptcy debt.” Scotland has no disclaimer, so an abandoned lease is not terminated by disclaimer at all.

How do you remove a registered lease from your title?

In England and Wales, you remove a disclaimed registered lease by applying to HM Land Registry for lease closure, usually through the lease closure–disclaimer transaction, with the notice of disclaimer and insolvency evidence. The Land Registration Rules say that, if the registrar is satisfied the estate has determined, “he must close the registered title to the estate and cancel any notice in any other registered title relating to it.” HM Land Registry’s practice guide says: “To apply, you should include the ‘lease closure- disclaimer transaction in your application.” You do not normally use CN1 where the lease itself is substantively registered, because HM Land Registry says: “CN1 is only ever required if the lease in question is not substantively registered.” A pre-disclaimer charge, sublease or other encumbrance may stop closure. In Scotland, there is no disclaimer route; a terminated registered lease is dealt with through the Scottish registration system, and “The Keeper must rectify the inaccuracy if what is needed to do so is manifest.” In Northern Ireland, registration consequences depend on the Land Registry position and any vesting order.

Last reviewed September 2026.

Sources

• GOV.UK, put your company into administration — “You’ll be protected from legal action by people or organisations who are owed money (‘creditors’) and nobody can apply to wind up your company during administration.” Source
• Pillar Denton Ltd v Jervis [2014] EWCA Civ 180 — “The true extent of the principle, in my judgment, is that the office holder must make payments at the rate of the rent for the duration of any period during which he retains possession of the demised property for the benefit of the winding up or administration (as the case may be).” Source
• Insolvency Act 1986 s.178 — “This and the next two sections apply to a company that is being wound up in England and Wales.” Source
• Insolvency Rules 2016 r.19.1 — “This Part applies to disclaimer by a liquidator under section 178 (winding up) and by a trustee under section 315 (bankruptcy).” Source
• Insolvency Act 1986 Schedule 1 — “Power to grant or accept a surrender of a lease or tenancy of any of the property of the company, and to take a lease or tenancy of any property required or convenient for the business of the company.” Source
• Insolvency Act 1986 s.178 — “Subject as follows, the liquidator may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it, or otherwise exercised rights of ownership in relation to it.” Source
• Insolvency Act 1986 s.130 — “When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.” Source
• MBM Commercial, Disclaiming demystified — “The effect of abandonment of a lease by a liquidator is not to actually bring the lease to an end.” Source
• Insolvency Act 1986 s.315 — “Subject as follows, the trustee may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.” Source
• Insolvency (Northern Ireland) Order 1989 art.288 — “Subject to paragraph (4) and Articles 289 to 291, the trustee may, by the giving of the prescribed notice, disclaim any onerous property and do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.” Source
• Bankruptcy (Scotland) Act 2016 s.110 — “refuse to adopt it.” Source
• Insolvency Act 1986 s.315 — “but does not, except so far as is necessary for the purpose of releasing the bankrupt, the bankrupt’s estate and the trustee from any liability, affect the rights or liabilities of any other person.” Source
• Hindcastle Ltd v Barbara Attenborough Associates Ltd [1996] UKHL 19 — “Thus when the lease is disclaimed it is determined and the reversion accelerated but the rights and liabilities of others, such as guarantors and original tenants are to remain as though the lease had continued and not been determined.” Source
• Insolvency Act 1986 s.315 — “Any person sustaining loss or damage in consequence of the operation of a disclaimer under this section is deemed to be a creditor of the bankrupt to the extent of the loss or damage and accordingly may prove for the loss or damage as a bankruptcy debt.” Source
• Land Registration Rules 2003 r.79 — “Subject to paragraph (3), if the registrar is satisfied that the estate has determined, he must close the registered title to the estate and cancel any notice in any other registered title relating to it.” Source
• HM Land Registry Practice Guide 26 — “To apply, you should include the ‘lease closure- disclaimer transaction in your application.” Source
• HM Land Registry blog, Cancellation of leases — “CN1 is only ever required if the lease in question is not substantively registered.” Source
• Land Registration etc. (Scotland) Act 2012 s.80 — “The Keeper must rectify the inaccuracy if what is needed to do so is manifest.” Source