Has the lease actually been broken? (3 Viewers)

psgm1 · Jun 28, 2013

With all the press announcements recently, there is in some quarters the belief that the lease has been broken.

But has it? When a company goes into admin, all ongoing liabilities remain intact until negotiated otherwise (as far as I know this hasn't occured), and under TUPE rules all liabilites (such as rent) are transferred to the "new" company.

No question they are in breach of contract, but that doesn't necessarily mean automatic cancellation of contract! Of course an expert could tell one way or another, but certinly had sisu paid rent in full the lease would have continued as before!

Is this correct? would like to hear from OSB / squirrel or anyone else who may well know for definite

chiefdave · Jun 28, 2013

it's not uncommon for a lease to be terminated when an insolvency event, such as administration, occurs. We would need to see a copy of the lease to know if that's the case here however if you look at what PA has actually said he hasn't sold Ltd he's sold some of the assets so the lease will now be the only thing left in Ltd and either PA himself or SISU will no doubt liquidate Ltd.

So unless ACL had the foresight to include terms that moved possesion of the lease with the Golden Share that will be the end of the lease. Not sure where ACL would stand legally on trying to recover the balance of the lease from another SISU company as a linked entity.

italiahorse · Jun 28, 2013

ACL would be stupid not to secure a long term agreement after committing so much money.
ACL were stupid in not allowing SISU to get some of the stadium to guarantee this commitment.

I would say that the £1.4 M is just a part of the settlement required.

All seems to be dragging out particularly as ACL have said today that they have not been made any offer yet. What is going on here ? What is the order of events?

ericagradus · Jun 28, 2013

The lease will contain forfeiture provisions. These will include things such as non payment of rent, breach of tenant covenant, and insolvency events.

The landlord may not have, however, exercised his right of forfieture. And this is not something that we can 100% be certain of. We can however surmise on the actions of the Landlord. Initially on the basis that the tenant was not longer at the ground, I concluded that the landlord had exercised his right, serviing notice and ontaining possession. However, I recall that, rather significantly, that the Landlord catergorically came out at the time to confirm that they had not kicked Cov out.

So we cannot be certain, but I would conclude that the lease is still in place.

wingy · Jun 28, 2013

chiefdave said:
it's not uncommon for a lease to be terminated when an insolvency event, such as administration, occurs. We would need to see a copy of the lease to know if that's the case here however if you look at what PA has actually said he hasn't sold Ltd he's sold some of the assets so the lease will now be the only thing left in Ltd and either PA himself or SISU will no doubt liquidate Ltd.

So unless ACL had the foresight to include terms that moved possesion of the lease with the Golden Share that will be the end of the lease. Not sure where ACL would stand legally on trying to recover the balance of the lease from another SISU company as a linked entity.

Interesting CD,I mentioned in another thread that if he liquidates whats left after yesterday, has he not let SISU make what Before preferred status would be a Conditional offer,something none of the potential bidders had the right to do. Also,if the lease is Live,with the potential to bring it all crashing down, has he actually done the best for the company going forward ,or simply for the people who appointed him.:thinking about:

chiefdave · Jun 28, 2013

wingy said:
Interesting CD,I mentioned in another thread that if he liquidates whats left after yesterday, has he not let SISU make what Before preferred status would be a Conditional offer,something none of the potential bidders had the right to do. Also,if the lease is Live,with the potential to bring it all crashing down, has he actually done the best for the company going forward ,or simply for the people who appointed him.:thinking about:

I can't understand how it's allowed that SISU, as the only people who knew what assets Ltd had are allowed to make a bid just for those assets. I guess it must be legal, would need an expert to tell us that, but it's fair from a fair and transparent process. There's also the issue that one of the aims of admin is supposed to be finding a solution that secures a future for the company but PA seems to have taken a route that will lead to liquidation.

This all seems to be based on Holding beneficial ownership but surely it's not down to PA to rule on that. Shouldn't he take all the bids at face value and if holdings want to drag it throught he courts at a later point that's not really anything to do with him. As that excellent blog pointed out FL doens't recognise beneficial ownership of the Golden Share and PA seems to be saying he's sold an asset from Ltd that they don't own as it's reverted to the FL upon entering administration.

Hopefully ACL and / or the trust have got a lawyer looking at all this as it's seem a little suspect to say the least.

ericagradus · Jun 28, 2013

chiefdave said:
I can't understand how it's allowed that SISU, as the only people who knew what assets Ltd had are allowed to make a bid just for those assets. I guess it must be legal, would need an expert to tell us that, but it's fair from a fair and transparent process. There's also the issue that one of the aims of admin is supposed to be finding a solution that secures a future for the company but PA seems to have taken a route that will lead to liquidation.

This all seems to be based on Holding beneficial ownership but surely it's not down to PA to rule on that. Shouldn't he take all the bids at face value and if holdings want to drag it throught he courts at a later point that's not really anything to do with him. As that excellent blog pointed out FL doens't recognise beneficial ownership of the Golden Share and PA seems to be saying he's sold an asset from Ltd that they don't own as it's reverted to the FL upon entering administration.

Hopefully ACL and / or the trust have got a lawyer looking at all this as it's seem a little suspect to say the least.

They may be group companies with the same benificial owners, but each company is a seperate legal entity. Unfortunately this type of transaction is not uncommon in the business world, but the same has obviously been highlighted here as we are dealing with a football club which is part of a community as opposed to a business doing flat boxes for example

chiefdave · Jun 28, 2013

ericagradus said:
They may be group companies with the same benificial owners, but each company is a seperate legal entity. Unfortunately this type of transaction is not uncommon in the business world, but the same has obviously been highlighted here as we are dealing with a football club which is part of a community as opposed to a business doing flat boxes for example

but how can they claim beneficial ownership and argue everything in linked one minute when it suits them but then when it comes to something like the lease say forget that it's in another company, nothing to do with us!

ericagradus · Jun 28, 2013

chiefdave said:
but how can they claim beneficial ownership and argue everything in linked one minute when it suits them but then when it comes to something like the lease say forget that it's in another company, nothing to do with us!

This is the point that a Company is a legal entity, not the benificial owners.

wingy · Jun 28, 2013

ericagradus said:
This is the point that a Company is a legal entity, not the benificial owners.

Pleased to see you on the site Erica ,Was thinking of Pm you as you have knowledge in this field .:claping hands::claping hands:

Has the lease actually been broken? (3 Viewers)

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