Key takeaways
- On entering liquidation, the appointed office-holder notifies tenants and provides new bank details for rent and service payments.
- Tenants can propose appointing a property professional to oversee maintenance and help preserve the building’s value.
- What happens to the property depends on its value, your tenant’s financial position, and their willingness to invest.
- Property is slow to sell, so acting early and taking licensed insolvency advice helps you understand your options.
Why early property advice protects value
When a company enters liquidation, its commercial property does not stop being an asset that needs managing. This guide explains what happens to your property and where specialist advice helps.
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.
Property support when your business is under pressure
Difficult situations call for clear advice from people you can trust. Our asset advisory, restructuring, and recovery team advises on property and assets when a business is in difficulty, working alongside your insolvency practitioner. We have local knowledge across the UK, and we tailor our advice to your situation and your objectives.
To talk through your options, complete the form below and we will be in touch.
Get in touch with the BTG Eddisons team
Please contact us for more details and information.
