‘Much Anticipation’ Over Final Decision On Ongoing Case

By Rob Dixon

Business occupiers, commercial property owners and administrators will be eagerly awaiting the Court of Appeal’s decision related to the ongoing issue of landlords seeking unpaid rent from the administrators of high street retailer Game, according to a property litigation expert.

The case relates to the decision to place Game into administration last year 24 hours after a rent quarter day, meaning the administrators were not liable to pay rent to landlords during their first three months of occupation – in line with the landmark Goldacre ruling.

However, the latest development in the ongoing saga is that landlords will see their case in relation to the rent fast-tracked to the Court of Appeal.

Danny Revitt, a Partner and expert in property litigation at Irwin Mitchell, said that many will be keen to see the outcome of the challenge.

He outlined: “The Goldacre decision was initially welcomed by landlords, but it soon became apparent that the timing of an administration in relation to the rent payment date took central stage. The Game case is a big test as to how “landlord friendly” the courts want to be when it comes to administrations.”

“Goldacre decided that administrators must pay any rent falling due after their appointment as an expense of the administration provided that they were using the premises for the benefit of the creditors. The effect of this was that, if a quarter’s rent fell due while they were using the premises, they would have to pay the full quarter’s rent even if they ceased using the premises well before the end of that quarter.”

“This has lead to the common practice of companies being placed into administration just after a rent payment date, potentially giving the administrators up to 3 months use of the premises before the rent becomes an expense of the administration.”

Danny added: “The obvious middle ground would be for administrators to be required to pay rent as an expense of the administration on a daily basis for as long as they use the premises for the benefit of the creditors. It remains to be seen which line the Court of Appeal will take.”

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