The recent administration of National Car Parks (NCP) provides a stark reminder of how lease structures can move from a background consideration to the central cause of distress.
Once seen as a resilient, cash-generative model, the 95-year-old NCP, which grew taking over London’s Blitz-era bombsites, has been wiped out by post-pandemic demand shifts and, crucially, high fixed costs driven by long-term, inflexible leases.
Running 340 sites nationwide and with chunky rent liabilities falling due, the business ultimately ran out of cash. This is not an isolated picture, but a useful prompt for a broader discussion: optimal lease restructuring is often the difference between survival and insolvency.
At the first signs of financial pressure, commercial pragmatism and legal rights should be weighed equally. Lease restructuring is best approached consensually. For tenants, this means engaging early, before arrears crystallise, to explore measures such as rent deferrals, monthly payments, or turnover-linked arrangements.
From a landlord’s perspective, the shift in recent years has been notable. The traditional reliance on enforcement remedies has softened into a more commercial analysis: is it better to hold out for full rent, or preserve income, albeit reduced, from a viable occupier?
In sectors facing structural change (high-cost parking being a clear example), landlords are increasingly willing to support short-term concessions where this preserves long-term asset value. As highlighted across the property advisory market, active asset management and flexibility are now core to value protection rather than signs of weakness.
Where informal negotiations fail, tenants may turn to formal processes such as Company Voluntary Arrangements (CVAs) or Restructuring Plans. These allow for selective lease adjustment, often categorising sites into performing, marginal, and loss-making.
For tenants, this can mean:
- Rent reductions on marginal sites
- Exit from unprofitable locations
- Transition to turnover-based rent models
For landlords, however, these processes introduce complexity and even tension. Voting rights, class composition and fairness challenges have become increasingly contested territory. Landlords are no longer passive stakeholders; they are active participants, frequently scrutinising valuation assumptions and challenging differential treatment.
The NCP situation is interesting here. Despite previous restructuring efforts, the underlying issue (a portfolio weighted towards inflexible leases) proved difficult to resolve where trading performance continued to deteriorate.
Once a business enters administration, the approach to leases becomes more binary. Administrators must act in creditors’ interests, and the property portfolio is rapidly triaged.
In NCP’s case, this has already resulted in the closure of a number of unviable sites, with others expected to be sold or transferred.
For tenants (via administrators), key tools include:
- Disclaimer of onerous leases, removing ongoing liabilities
- Assignment or sale of profitable sites
- Short-term trading arrangements to preserve value pending sale
For landlords, the position is often less favourable. Disclaimer removes the tenant but not the underlying lease, leaving vacant assets and unsecured claims. As a result, landlords are increasingly focused on engagement with administrators to influence outcomes—whether through supporting a going concern sale or negotiating new terms with incoming operators. Landlord strategy is shifting from enforcement to repositioning: adopting a broader asset management lens, owners of premises or sites are tending to prioritise:
- Supporting restructuring to maintain occupation
- Reletting on more flexible terms
- Repurposing sites entirely (as may occur with certain NCP locations, particularly those no longer viable as parking assets)
This aligns with a broader market view that commercial property as an asset class is no longer a passive income stream, but an actively managed component of business recovery and transformation.
The key lesson from NCP is not simply that businesses fail, but how they fail. A model once described as ‘high margin’ has been undermined by structural shifts: remote working post-Covid, changing consumer habits, and an inability to flex costs accordingly.
For tenants, the message is clear: lease flexibility is no longer optional; it is a core resilience tool. For landlords, commercial, legal and strategic adaptability is increasingly essential to preserve value.
In that context, lease restructuring should no longer be viewed as a last resort. In the current market, it is a central, and often decisive, feature of the UK insolvency landscape.
Written by David Buchler, chairman at Buchler Phillips, a UK based independent boutique firm with an impeccable Mayfair heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.