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My Ltd company leased a property on a 10 year lease with an exit clause at year 5. We are 18 months into our tenancy and have hit a worrying quiet spell which has got me thinking about my personal liability should the business fail. What I m unsure about is whether I would personally be liable for the business lease should the Ltd company no longer be able to pay the lease. I have read through the lese however I must confess I struggle to understand it. What I have taken from it is that if the company were to become insolvent the lease would be terminated by the landlord and the insolvency practitioner would be responsible for fulfilling any outstanding monies during the liquidation of the company and I would not personally be liable for any outstanding payments.
Below is a copy of the section on Irritancy from my lease. Could someone please confirm whether I am correct in my understanding?
Subject always to the provisions of Sections 4, 5 and 6 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 if at any time during the currency of this Lease the Tenant shall allow the said rent or any part thereof to remain unpaid for fourteen days after the days appointed for payment thereof in terms of this Lease whether the same shall have been lawfully demanded or not or if the Tenant shall at any time fail to implement or shall contravene any of the conditions, provisions, restrictions and others contained in this Lease or in the event of the Tenant (being a company or corporation) going into liquidation (other than a voluntary liquidation for the purpose of reconstruction or amalgamation) or having a receiver appointed in respect of any part of their undertaking or having an administrator appointed or (being an individual or partnership) if he or they shall sign a trust deed for creditors or become apparently insolvent within the meaning of the Bankruptcy (Scotland) Act 1985, then and in any of these events, the Tenant shall forfeit all right and title under these presents and the Landlord shall be entitled forthwith to terminate this Lease and treat this Lease and all transmissions thereof with all that has followed or can competently follow thereon as void and null and the Premises shall thereupon revert to the Landlord and it shall be lawful for the Landlord or any person or person duly authorised by the Landlord in that behalf to enter upon the possession of the Premises or any part thereof in name of the whole and to uplift rents, eject Tenant and occupiers and thereafter use, possess and enjoy the same free of all claims by the Tenant as if these presents had never been granted without prejudice to any right of action or remedy of the Landlord in respect of the premature termination of this Lease or of any antecedent breach by the Tenant of any of the conditions contained in this Lease which irritancy is hereby declared to be pactional and not penal and shall not be purgeable at the Bar PROVIDED ALWAYS THAT the Landlord's right of irritancy herein contained may not be exercised:-
7.1 on account of failure by the Tenant to make payment of rent or any other sum of money as aforesaid unless and until a period of fourteen days has elapsed after written notice has been given by the Landlord to the Tenant, any sub-tenant (whose details have been previously intimated to the Landlord) and any heritable creditor (whose details have been previously intimated to the Landlord) detailing the failure and referring to this Clause without the Tenant or the sub-tenant or the heritable creditor having made payment to the Landlord of the amount due; or
7.2 on account of any other failure or contravention by the Tenant which is capable of being remedied, albeit late, unless and until a reasonable period (specified in the aftermentioned notice and having due regard to the nature and extent of the breach complained of) has elapsed after written notice has been given by the Landlord to the Tenant, any sub-tenant (whose details have been previously intimated to the Landlord) and any heritable creditor (whose details have been previously intimated to the Landlord) detailing the failure or contravention and referring to this Clause without the Tenant or the sub-tenant or the heritable creditor having remedied the same; or
7.3 in the case of the Tenant becoming insolvent or apparently insolvent or going into liquidation (other than for the purpose of reconstruction or amalgamation) or suffering a receiver or administrator to be appointed unless and until it shall first allow the interim trustee or permanent trustee or the liquidator, receiver or administrator as the case may be (such interim trustee and others being hereinafter generically referred to as "the Insolvency Practitioner") and any heritable creditor a period of twelve months (reckoning from the date of appointment of the insolvency Practitioner) in which to dispose of the interest of the Tenant under this Lease (on the same terms as are set out in this Lease) but only if the Insolvency Practitioner or the heritable creditor as the case may be shall personally undertake to fulfil all outstanding obligations, including payment of monies, incumbent upon the Tenant under this Lease whether relating to a period before or after the said date of appointment until the expiry of the said period of twelve months or, if earlier, the date of entry under a permitted disposal of this Lease, and the Landlord shall be entitled to terminate this Lease as aforesaid if the Insolvency Practitioner or the heritable creditor as the case may be shall fail to implement the obligations incumbent on them in terms of this Clause or the Insolvency Practitioner and the heritable creditor shall fail to dispose of the Tenant interest within the said period.
Below is a copy of the section on Irritancy from my lease. Could someone please confirm whether I am correct in my understanding?
Subject always to the provisions of Sections 4, 5 and 6 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 if at any time during the currency of this Lease the Tenant shall allow the said rent or any part thereof to remain unpaid for fourteen days after the days appointed for payment thereof in terms of this Lease whether the same shall have been lawfully demanded or not or if the Tenant shall at any time fail to implement or shall contravene any of the conditions, provisions, restrictions and others contained in this Lease or in the event of the Tenant (being a company or corporation) going into liquidation (other than a voluntary liquidation for the purpose of reconstruction or amalgamation) or having a receiver appointed in respect of any part of their undertaking or having an administrator appointed or (being an individual or partnership) if he or they shall sign a trust deed for creditors or become apparently insolvent within the meaning of the Bankruptcy (Scotland) Act 1985, then and in any of these events, the Tenant shall forfeit all right and title under these presents and the Landlord shall be entitled forthwith to terminate this Lease and treat this Lease and all transmissions thereof with all that has followed or can competently follow thereon as void and null and the Premises shall thereupon revert to the Landlord and it shall be lawful for the Landlord or any person or person duly authorised by the Landlord in that behalf to enter upon the possession of the Premises or any part thereof in name of the whole and to uplift rents, eject Tenant and occupiers and thereafter use, possess and enjoy the same free of all claims by the Tenant as if these presents had never been granted without prejudice to any right of action or remedy of the Landlord in respect of the premature termination of this Lease or of any antecedent breach by the Tenant of any of the conditions contained in this Lease which irritancy is hereby declared to be pactional and not penal and shall not be purgeable at the Bar PROVIDED ALWAYS THAT the Landlord's right of irritancy herein contained may not be exercised:-
7.1 on account of failure by the Tenant to make payment of rent or any other sum of money as aforesaid unless and until a period of fourteen days has elapsed after written notice has been given by the Landlord to the Tenant, any sub-tenant (whose details have been previously intimated to the Landlord) and any heritable creditor (whose details have been previously intimated to the Landlord) detailing the failure and referring to this Clause without the Tenant or the sub-tenant or the heritable creditor having made payment to the Landlord of the amount due; or
7.2 on account of any other failure or contravention by the Tenant which is capable of being remedied, albeit late, unless and until a reasonable period (specified in the aftermentioned notice and having due regard to the nature and extent of the breach complained of) has elapsed after written notice has been given by the Landlord to the Tenant, any sub-tenant (whose details have been previously intimated to the Landlord) and any heritable creditor (whose details have been previously intimated to the Landlord) detailing the failure or contravention and referring to this Clause without the Tenant or the sub-tenant or the heritable creditor having remedied the same; or
7.3 in the case of the Tenant becoming insolvent or apparently insolvent or going into liquidation (other than for the purpose of reconstruction or amalgamation) or suffering a receiver or administrator to be appointed unless and until it shall first allow the interim trustee or permanent trustee or the liquidator, receiver or administrator as the case may be (such interim trustee and others being hereinafter generically referred to as "the Insolvency Practitioner") and any heritable creditor a period of twelve months (reckoning from the date of appointment of the insolvency Practitioner) in which to dispose of the interest of the Tenant under this Lease (on the same terms as are set out in this Lease) but only if the Insolvency Practitioner or the heritable creditor as the case may be shall personally undertake to fulfil all outstanding obligations, including payment of monies, incumbent upon the Tenant under this Lease whether relating to a period before or after the said date of appointment until the expiry of the said period of twelve months or, if earlier, the date of entry under a permitted disposal of this Lease, and the Landlord shall be entitled to terminate this Lease as aforesaid if the Insolvency Practitioner or the heritable creditor as the case may be shall fail to implement the obligations incumbent on them in terms of this Clause or the Insolvency Practitioner and the heritable creditor shall fail to dispose of the Tenant interest within the said period.
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