IPs weigh up Regus insolvency threat

The relationship between insolvency practitioners (IP) and landlords could be
put under even further strain following administration threats by one of the
UK’s largest companies.

Landlords claim that office provider Regus has threatened to place its
smaller sites into an insolvency process if they did not renegotiate property
contracts.

Liz Peace, chief executive of the British Property Federation, said that the
Regus ploy was “cynical” and called for insolvency rules to be tightened to stop
similar situations happening in the future.

The insolvency profession is concerned the conflict could hamper their
dealings with landlords in future situations.

There is already a strain in the relationship, as landlords feel they lose
out in some administrations, say advisers. “The last thing IPs want is to sit
down with landlords in a case and for them to say ‘hang on, you did this in
another case’,” said Garry Brett, insolvency expert and partner in real estate
at law firm Stevens & Bolton.

Chris Laughton, partner and IP at Mercer & Hole, believes landlords
should use an insolvency expert to help determine whether insolvency processes
have been used fairly.

Regus, which posted profits of £2m in the last year, told Accountancy Age it
had sought to “re-gear” its landlord ­liabilities by requesting renegotiations
of its rental fees on a small number of loss-making properties.

In our view

The move could have ripple affects on future administrations. IPs are widely
seen as playing it tough when it comes to negotiating contacts. However they
should be seen as the helping hand in a difficult situation, and someone to be
welcomed – not the strong arm of the law with which companies can make their
threats with.

Further reading:

Regus’s
insolvency strategy enrages property trade body