Can the landlord of a tenant that has gone into administration or liquidation claim preferential treatment, ahead of ordinary unsecured creditors, for the payment of rent?
In Goldacre (Offices) Ltd v Nortel Networks UK Ltd (in administration) it was held that, in the case of premises kept running by the administrators, all rent falling due after the date of the administration was payable ahead of ordinary unsecured creditors as “an expense of the administration”.
However in Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd (in administration) the court ruled that rent cannot be claimed as an administration expense for a given quarter when administrators are appointed after the payment day for that quarter. This was a blow to landlords. It led to tenants, such as Game, taking maximum advantage by appointing administrators the day after a rent quarter day.
However, in the recent case of Pillar Denton v Jervis (a test case brought by a representative selection of Game’s disgruntled landlords), the Court of Appeal has ruled that administrators and liquidators must pay rent pro rata for the period during which they keep the premises running, regardless of when the relevant payment day fell due.