Landlord Insolvency in the time of Coronavirus – Considerations for Retail Tenants


As the third national lockdown continues with no definite end in sight, retail tenants face continued uncertainty as to when they will be in a position to reopen to paying customers and whether their existing resources and the Government’s business support scheme will be enough to see them through the current crisis.

An obvious concern for tenants is their ability to pay the rent due under their leases but one often overlooked factor is the financial viability of landlords and whether landlord insolvency may lead to shopping centres being closed and retailers being unable to trade when lockdown is lifted.

Case Study – Intu Properties plc

In August 2020, the collapse into administration of Intu Properties plc, a large retail landlord and owner of Manchester’s Trafford Centre and Essex’s Lakeside among 17 shopping centres, brought into sharp focus the difficult financial situation facing landlords and the potential implications of their plight for retail tenants. Intu remains in administration and while transitional service agreements have been put in place by the administrators to, subject to the lifting of lockdown, keep the individual units open and trading, there remains uncertainty for the future of the centres and the occupational tenants going forwards.

So, how can retail tenants prepare for such a scenario?

  1. Pay Close Attention to the Landlord’s Financial Position

All retail tenants should pay close attention to the financial position of their landlords. It may not be easy to obtain information regarding the financial position of smaller landlords but the financial plight of larger landlords will often be reported by the national and international media.

  1. Obtain Legal Advice to Mitigate Impact

Retail tenants should check the terms of their leases carefully to consider what their options will be in the event their landlord becomes insolvent. While many retail leases will not provide for what will happen in the event the outer doors of a shopping centre are closed due to landlord insolvency, tenants will have options in the event a landlord is insolvent and they are unable to trade from let premises.  Immediate legal advice should be sought if it appears that a landlord will fall into administration and both legal and practical steps should be taken to mitigate the financial impact on the tenant.

  1. Consider Other Effects of Landlord Insolvency

Even if a shopping centre is not shut entirely, preventing tenants from trading, landlord insolvency may lead to a reduction in the operational services, such as cleaning or security, or marketing activities to promote the centre. These effects may constitute a breach of the lease on the landlord’s part and tenants may be able to argue for a reduction in rent based on the reduced services provided, as these factors are within the control of the landlord.


As part of the financial measures taken by the Government to support businesses through the pandemic, landlords and lenders were prevented from taking action against tenants for non-payment of tent. However, as more tenants reach the financial tipping point, more retail landlords are likely to be affected by lack of liquidity and the potential breach of lenders’ income and loan to value requirements on lending facilities may see more landlord insolvency in the coming months.

Retail tenants should prepare for all eventualities to ensure they are best placed to react quickly in the event of landlord insolvency.

If you would like to discuss any of the issues raised in this article, or if you would like legal advice on the terms of your lease, please contact Dominic Dos Remedios by emailing  [email protected] or by calling him on 01635 508122.

Dominic Dos Remedios

Commercial Property

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