Key Point

Liability for utility bills arising in an administration after trading had ceased did not rank as an expense of the administration.

The facts

British Gas supplied electricity and gas to a company. After it had gone into administration BG continued supplying the company at over 200 sites under new daily rate contracts which were deemed to arise as a result of the operation of certain provisions of the Gas Act and Electricity Act. Some of the sites were sold off and the question arose as to whether BG could recover their charges for all sites as an administration expense.

Decision

The Court held that any charges which related to a period where the relevant site was not being used in the administration for trading was not an administration expense. Those charges would be unsecured claims against the company.

Comment

The outcome in this case is an application of the same principles discussed in relation to rent in the Game administrations discussed in one of our earlier articles available here.  As the Court pointed out there may be facts relevant to the particular case  - conduct in relation to individual stores and notice issues – which might fix the administrator with a liability ranking as an expense but the general principle is the administrators will only pay for what they use as an expense and the remainder will be an unsecured claim.

Laverty v British Gas Trading