What happens to my commercial property following liquidation?

What happens to property assets during liquidation?

If your limited company is experiencing financial distress and you fear that liquidation might be your only option, there are a range of possible outcomes for your commercial property assets.

When you first enter liquidation the appointed office-holder will notify your tenant(s) of the liquidation by letter, and provide new bank details to make rent and service payments whilst liquidation takes place.

Ongoing property management

Under landlord and tenant legislation, the tenant can propose to appoint a property professional to oversee maintenance of the building. This would help to preserve its value during the liquidation process, or the transfer to the Crown.

If a leaseholder is planning to purchase the freehold, they have a vested interest in how the building is maintained. They may decide, therefore, to apply to the First-tier Tribunal (FTT) in this respect.

Professional support for your commercial property business

When your asset base is commercial property, it can be difficult to remedy financial problems quickly enough to stave off insolvency. Physical property is an illiquid asset – it takes time to sell, and bank lending may not be forthcoming.

If you’re a commercial landlord and your company is experiencing severe financial issues, you need to act quickly to prioritise your creditors’ interests. Liquidations can often be lengthy and complex affairs, and preserving asset value is a key issue in prioritising creditor interests whatever the outcome.

Seeking licensed insolvency support is crucial, and will help you understand your options and obligations under insolvency law. There are specific benefits to entering into liquidation voluntarily, as you may be eligible to claim redundancy pay as a director.

What happens to your commercial property following liquidation depends on several factors, including its inherent value, your tenant’s own financial position, and their willingness or otherwise to make an investment themselves.