For a landlord it might be tempting to ignore the plight of a commercial tenant going down for the third time under a rising tide of unserviceable debt.
After all, that’s just their business, isn’t it?
Not exactly. Once a tenant becomes insolvent, and where an administrator is appointed, the landlord is virtually powerless to take steps to protect his investment.
A landlord might think it has all manner of protection, such as the ability to forfeit the lease if the tenant becomes insolvent, or the right to retain the rent deposit.
Think again. Once a formal administration process begins the landlord becomes little more than an onlooker - unable to do anything without the permission of the courts or the administrator.
Unfortunately this is exactly the scenario being played out in high streets and business districts across Britain as the squeeze on credit tightens.
Often communications between the landlord and tenant are so flimsy that by the time any problems surface it is too late for the landlord to influence events - by reducing the rent or agreeing payment plans, for example - which inevitably means both sides suffer more than they ought.
What alarms me is the number of experienced and sophisticated landlords who don’t realise the position they might find themselves in, when and if the worst happens.
The smartest landlords these days are listening to their tenants, and behaving sympathetically.
If things have gone beyond that stage, and administrators are in place, the next best strategy is to stick as close to them as possible, offering advice to ensure the process can be completed quickly and to everyone’s satisfaction.
After all, an administrator will be just as keen as the landlord to resolve the position relating to the lease so that his administration can end.
By talking to the administrator, and trying to ensure he ties the buyer of the business into the premises as well, landlords can help ensure disaster is avoided.
*Fiona Thomson is a partner in the Real Estate team at Birmingham-based law firm Clarke Willmott.