Retailer To Pay £3 Million In Unpaid Rent Following Ruling

The Court of Appeal has ruled that computer games retailer Game has to pay around £3 million in unpaid rent to landlords, following the latest part of the legal battle related to rent not paid while the company was in administration.

The case related to the decision in 2012 to place Game into administration a day after a rent quarter day, which meant administrators were not obliged to pay rent to landlords including Land Securities, Hammerson and British Land during the first three months of occupation.

However, the landmark decision made in the Court of Appeal closes the legal loophole which the case revolves around, meaning the retailer is liable to pay the outstanding rent.

Following the ruling, Game said the decision would have a “significant financial impact” on landlords, tenants and insolvency practitioners and added that an appeal to the Supreme Court was under consideration.

Duncan Grubb, Head of Credit at Hammerson, added that the judgment provided “a workable, common sense resolution to the payment of rent as an administration expense”.

Expert Opinion

Game’s administrators had avoided paying rent as a result of the landmark Goldacre and Luminar decisions, which led to a common practice of companies being placed in administration just after a rent payment date – which mean administrators could get up to three months of use of premises before rent becomes their expense.

“Today’s ruling has provided vital clarity to this area, closing the loophole and ensuring landlords are on a surer footing when it comes to administrations. However, it will be interesting to see whether the case is now taken to the Supreme Court for an absolute final decision on this vital issue.

“The outcome of the appeal means administrators will be required to pay rent as an expense of the administration calculated on a daily basis, as long as they occupy and use the premises for the benefit of the creditors.

“This is a logical and sensible outcome and reverts the position to the old regulations pre-Goldacre, providing an element of certainty for all parties involved. However, it will be interesting to see what the next step in this long-running legal saga is.”
Christopher Perrin - Partner