Malcolm Dowden on disputes of disclaimed leases & subtenants of part
A liquidator’s disclaimer of a lease ends the rights, interests and liabilities of the insolvent tenant in respect of the property, but statute preserves the rights and liabilities of other parties, including mortgagees and subtenants.
However, where subtenants remain in occupation, and particularly where they occupy only part of the premises covered by the disclaimed lease, the extent of their liabilities and obligations to the landlord is unclear.
The “phantom” lease
Insolvency Act 1986 s 178(4) provides that disclaimer: (i) determines, as from the date of disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed, but (ii)does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.
Hindcastle v Barbara Attenborough ([1997] AC 70, [1996] 1 All ER 737) confirmed that under this deeming provision the rights and liabilities of guarantors, mortgagees and subtenants remain as though the lease had continued.
This “phantom” lease is crucial to the
