Administrators

A recent Court of Appeal judgement has reversed the previous position on recovery of rent from an Administrator.

The previous leading authorities in this area had established that where Administrators used premises for the purposes of the administration rent was payable by the Administrator as an expense as it fell due.

As a result it had become common for companies to enter into administration immediately following a quarter day, so avoiding liability to pay the rent for that quarter even though they retained possession of the leasehold property.

The Court of Appeal decision in the Game Station case has overturned these earlier decisions. Consequently an Administrator must make rental payments under the lease for any period during which he retains possession of the premises for the benefit of the administration. Rent will accrue from day to day, and the duration of the period is not determined merely by reference to when the contractual rent payment day falls.

If you have queries or need advice about dealing with tenants in administration contact our commercial property team for advice.