Silver lining to LESG saga - MA Editor Andrew Pring

London & Edinburgh Swallow Group's collapse has been a nightmare for licensees caught up in the demise of this deeply flawed operation.

But our story this week that 450 LESG tenants and lessees can now talk direct to the individuals who own their pubs offers a ray of hope in an otherwise depressing saga.

And the delightful irony is that the boot is firmly on the other foot. Tenants who were struggling to meet absurdly high rent calls, and becoming sick with worry in the process, will now have a chance to get face to face with their landlord, who is also now sick with worry as he sees his pension fund evaporating. If this does not engender some sensible discussions about the way forward for both parties, it's hard to know what would.

For most of the landlords, this will be their first dealings with a licensee. They bought the pub at auction, and with LESG guaranteeing the rent, there was no need to even ever visit the pub. (Those of us who think this is a strange way to invest your millions must remember this is how the world of property generally works, so the LESG investors are not uniquely stupid - they were just very badly advised, and perhaps more greedy than is ever good for anyone.) But the point is that the landlords desperately need someone to run their pubs and deliver rental income - and who better than the people already running them?

This is a brilliant opportunity for the hard-pressed tenants to discuss realistic rents with their landlord. Nowhere near the previous rents, of course, but affordable enough to the licensee - so the landlord can sleep easily. And, in truth, if the licensees can enjoy the benefits of buying their beer direct, the rents they can then afford may not actually be that far south of the landlords' aspirations after all.

Some tenants may even find they can persuade their landlord to hand over the deeds to the pub. Shocked by what's happened to their future nest-egg, the investor may just want to take a half-decent offer and walk away for good. The pubcos that sold the pubs to LESG in the first place will not be wanting them back.

As they say, it's an ill wind. And it would be fantastic if some good came out of this disaster. Free of tie, and with their destiny in their own hands... sounds like a business model with a chance of success.

wyx