Success Story: Settling A Lease Debt To Avoid Liquidation

We were recently referred a client who we helped settle a lease debt to avoid liquidation. This is how.

Many businesses suffer financial difficulty during the period of their lease for various reasons including the current COVID-19 pandemic. Whilst directors of companies with lease debts may consider liquidation, this comes with other risks such as risks of personal guarantees or losing the rental bond.

For a company with a lease debt or un-manageable future lease obligations, as long as there are not significant other creditors, we will generally suggest that attempts be made to settle the lease debt or reduce future required lease payments. And we have helped many businesses negotiate settlements of their lease obligations over the years.

Rental Debt As A Result of Default Under Lease Agreement

We were engaged by a client who had an un- manageable lease debt. When we met with them, we were informed that:

  • The company was involved in legal proceedings in relation to a multi-year commercial lease agreement;
  • A Default judgment for more than $180,000 had been entered against the company;
  • Our client’s solicitors had already had settlement discussions with the landlord’s representatives, without success;
  • The landlord had advised they would not settle for anything less than $130,000;
  • The business had debts of almost $2,000,000 (many of which were loans from related entities) and held no significant assets; and
  • The landlord had expressed concern about the legitimacy of related party loans which the company owed.

Options Available To Our Client

Having reviewed our client’s financial circumstances, we advised our client of the options available, being:

Our client wanted to avoid liquidation and the costs involved with a voluntary administration, and so they engaged us to negotiate a settlement of the lease debt.

Settlement With The Landlord

We successfully negotiated a reduction of more than 80% in the lease debt owed and this was how we did it.

Using our experience as Liquidators, we presented the company’s financial situation to the landlord. We further advised the lessor that they would get no return if the company was placed in liquidation. We then made an offer of settlement and after some negotiations and counter-offers, the landlord agreed to a sum of $35,000 in full settlement of the lease debt.

This was obviously a great result for our client as it meant that a debt of nearly $200,000 (including interest and costs) was settled for just $35,000. It also meant our client avoided liquidation and the risks associated.

Contact us for Assistance

If your business is struggling or believe that your company will have difficulties paying its rent, please get in contact with us by phoning 07 3221 0055 or by contacting our Brisbane or Gold Coast office. Our experienced staff will be able to assist you.



We’re happy to answer any questions you may have, so please don’t hesitate to call us and schedule a consultation.



Level 12
127 Creek Street
Brisbane Qld 4000


Phone: 07 3221 0055
Fax: 07 3221 8885

Postal Address

GPO Box 691
Brisbane Qld 4001



Level 15, Corporate Centre One
2 Corporate Court
Bundall Qld 4217


Phone: 07 5630 1179
Fax: 07 3221 8885