Bear Stearns loses lease fight
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Your support makes all the difference.THE FIGHT to save the Canary Wharf development received a boost yesterday when Bear Stearns International, one of the existing tenants, lost a High Court battle to repudiate its lease.
BSI claimed Ernst & Young, the administrator, had repudiated the lease by breaching the original contract.
It said the administrator had refused to honour a deal agreed by the previous management to take over responsibility for BSI's old offices in Devonshire Square in the City. This was one of the incentives Olympia & York, the collapsed developer, offered tenants to persuade them to move to Canary Wharf.
But Mr Justice Morrit said in a 32-page judgment in the Chancery Division of the High Court that there was no repudiatory breach of the leasing agreement that BSI could use to discharge itself from its obligations.
If the decision had gone the other way other tenants with similar deals could have walked out on their leases. 'A defeat could have had serious repercussions,' a source close to the administrator said.
Mark Lehman, of BSI International in New York, said: 'We are seriously considering an appeal, but we haven't yet seen the decision.' The firm was taking advice from counsel. He confirmed that the US securities firm had been paying the rent on Devonshire Square, after the refusal of the administrator to take responsibility.
Alan Bloom, one of the joint administrators at Ernst & Young, said: 'We are delighted with the decision. However, having spent a considerable amount of time dealing with its legal issues, we now look forward to a good landlord- tenant relationship with BSI.'
Bear Stearns occupies almost 20,000 square feet on the 25th floor of the Canary Wharf tower, on a 25-year lease signed in July 1991 which now stands unless the High Court decision is overturned on appeal. Bear Stearns had a 14- month rent-free period to March this year, but since then has been forced to pay two lots of rent at a time when the property market has been too weak to find new tenants for its old space.
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