It is now clear that leases cannot be assigned to the tenant’s guarantor but serious issues arise out of the recent High Court case of EMI Group Limited v O&H Q1 Limited which specified that any lease assignment by a tenant to its guarantor is void. This means that the assignment is not effective, the lease is still held by the previous tenant and the intended assignee remains the guarantor of that previous tenant (and does not become the new tenant of the lease). In addition, be aware that the court’s decision applies retrospectively.

On 7 November 2014, OW Bunker A/S (“OW”), a global supplier and trader of marine fuel, filed for bankruptcy in Denmark. Further bankruptcies of OW subsidiaries and affiliates swiftly followed, including the bankruptcy of certain U.S. and Singapore-based OW entities.

Judgment in the Court of Appeal case of Pillar Denton v Game Retail- about rent due during the administration of Game was handed down yesterday. It is a landmark ruling for administrators, on the thorny issue of the payment of rent during the period of the tenant’s administration.

This morning we got the news that HMV had gone into administration and last week it was Jessop that went under. HMV’s administrators are still trading from the stores but the administrators of Jessops have ceased trading. Can their landlords expect their rent?

Just a short post to update our previous post on the issue of administrators being obliged to pay rent as an expense of the administration. 

There have been so many articles written and opinions expressed on the spate of cases on the effect of how netting provisions in over-the-counter ("OTC") derivative contracts work when a counterparty becomes in default, that you would be forgiven for being confused about the current position. Now that the dust has settled (for the time being at least), this article takes stock and seeks to make matters as straightforward as possible.

In January we posted on the impact of a case that ruled that landlords are able to claim rent as an expense of the administration when a tenant’s administrators are in occupation of all or part of a leasehold property.

In re Lehman Brothers Holdings, Inc., Case No. 08-13555 et seq. (JMP)(jointly administered)

In this US decision, the Bankruptcy Court held that the "safe harbour" protections of the US Bankruptcy Code only protect a non-defaulting party's right to liquidate, terminate or accelerate a swap, to offset and to net termination values and payment amounts and to foreclose on collateral, but do not permit the withholding of performance under a swap if the swap is not terminated.

A decision by the High Court in December has strengthened the position of landlords who sometimes do not get paid during the administration even where the administrator is running the business from the property.

Certain categories of expense which may be incurred by the company after it has gone into administration, and which an administrator has to pay are known as "expenses of the administration" and the assets of the company in administration must be applied towards payment of these expenses ahead of any payment to creditors under floating charges or to unsecured creditors.

We have spent a lot of time thinking about landlords being affected by tenants going into administration over the last year. This posting is about a court case where the landlord’s administrators were trying to postpone the tenant’s application to Court for the grant of a new tenancy under the 1954 Act.

The administrators failed in their attempts to defer the 1954 Act proceedings even though it severely affected the value of the property in question and the amount that was going to be paid out to the secured creditor.