Insolvent tenants and the effect of a surety

In RVB Investments Ltd v Bibby [2013] EWHC 65 (Ch), a landlord (RVB) issued proceedings against the surety (Bibby) of an insolvent tenant and was successful in its application for an order requiring Bibby to take a new lease of the premises and its claim for the business rates due in respect of the properties. An attempt to impose a higher rent without a rent review, however, failed.

RVB granted two leases to commercial tenant Bibby as surety, covenanted, among other things, to take a new lease for the residue of the lease terms if the leases were disclaimed. One lease was disclaimed by the liquidator and the other, after the tenant’s dissolution, by the Treasury Solicitors.

RVB primarily sought specific performance of Bibby’s covenant to take new leases. RVB also sought to claim a reviewed rent from Bibby, as well as a payment in respect of the rates liability…

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