New Clause 398

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:45 pm on 20th July 2006.

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Protection of persons holding under a lease (Sc)

‘(1) Where the property disclaimed is held under a lease in favour of a person claiming under the company, whether—

(a) as sub-lessee, or

(b) as creditor in a duly registered or (as the case may be) recorded heritable security over a lease,

the court must not make a vesting order except on the following terms.

(2) The person must by the order be made subject—

(a) to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property, or

(b) if the court thinks fit, to the same liabilities and obligations as if the lease had been assigned to him.

In either event (if the case so requires) the liabilities and obligations must be as if the lease had comprised only the property comprised in the vesting order.

(3) A sub-lessee or creditor declining to accept a vesting order on such terms is excluded from all interest in and security over the property.

(4) If there is no person claiming under the company who is willing to accept an order on such terms, the court has power to vest the company’s estate and interest in the property in any person liable (either personally or in a representative character, and either alone or jointly with the company) to perform the lessee’s obligations under the lease.

(5) The court may vest that estate and interest in such a person freed and discharged from all interests, rights and obligations created by the company in the lease or in relation to the lease.

(6) For the purposes of this section a heritable security—

(a) is duly recorded if it is recorded in the Register of Sasines, and

(b) is duly registered if registered in accordance with the Land Registration (Scotland) Act 1979 (c. 33).’.—[Margaret Hodge.]

Brought up, and added to the Bill.