It is now settled law that when an Administrator retains occupation of leasehold property on the basis that it will benefit of the company’s creditors, rent that relates to that period of occupation must be paid by the Administrator as an expense of the administration.
For Landlords this provides certainty that they are entitled to receive rent from Administrators during the whole period which the Administrator occupies the property. Such rent accrues on a daily basis regardless of when it is payable under the lease. This removes the previously contentious timing issues regarding the date upon which Administrators entered occupation (which was often after the quarter day when rent fell due).
Further to our news article in which Lee Donoghue reported the Court of Appeal decision in the GAME Retail Ltd case Pillar Denton Ltd and others v Jervis and others
The Insolvency Service is considering whether to recommend the inclusion of more detailed provisions regarding liabilities that rank as expenses of an administration in the forthcoming Insolvency Rules 2016. We will report further when the Insolvency Service’s recommendations are published.
For information or advice on this or any other insolvency related issues, please contact Navinder Grover or Lee Donoghue.
If you would like to discuss the property aspects of this decision, please contact Colin Richman or any member of our property litigation team.
