Vol 22 (2025) - Issue 3

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SBP 2 S.à r.l. v 2 Southbank Tenant Limited [2025] EWHC 16 (Ch)

Synopsis
The English High Court (the 'Court') granted summary judgment dismissing a forfeiture claim that relied on a forfeiture clause in a lease which triggered if a tenant or guarantor was unable or deemed unable to pay its debts within the meaning of sections 122 or 123 of the Insolvency Act 1986 (the 'Act').
2 Southbank Tenant Limited (the 'Defendant') argued that the statutory wording was incorporated in full in the lease and so a right of re-entry could only arise under the lease if the tenant or guarantor's insolvency had been proven to the satisfaction of the court (which had not taken place). SBP 2 S.à r.l. (the 'Claimant') counter-argued that no prior judicial determination of insolvency was required for the re-entry right to arise.
The Court found in favour of the Defendant, granting summary judgment dismissing the forfeiture claim.
It found that a natural reading of the re-entry clause supported the Defendant's construction, while the Claimant's reading would ignore the statutory wording requiring judicial determination of insolvency under the relevant sections of the Act.