The Court of Appeal today overturned existing rules on when administrators have to pay rents falling due before their appointment. The Court ruled that rent payable in advance can be treated as an administration expense such that administrators cannot avoid paying rent payable in advance that falls due before the date on which the administrator is appointed.
The case concerning the Game group of companies' administration has now been played out in the Court of Appeal and the eagerly anticipated judgment has been handed down.
The issue at stake concerned a landlord's ability to recover rent as an expense of administration (and therefore payable before other creditors) where such rent is payable in advance but where the tenant's administration occurs immediately before a quarter day's rent falling due.
The Court of Appeal delivered judgment on Monday morning in the much anticipated appeal in Jervis & Others v Pillar Denton & Others on the treatment of rent payable under a lease held by a corporate tenant that enters administration. The case involved the Game Administration.
Key points
Earlier this week, the English Court of Appeal overturned the recent decisions in Goldacre (Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] EWCH 3389 (Ch);2011 Ch 455) and Luminar (Leisure (Norwich) II Ltd v Luminar Lava Ignite [2012] EWCH 951 (Ch)) regarding the treatment of rent in an administration.
21 November 2013
[2013] EWHC 3612 (Comm)
Commercial Court, Queen's Bench Division (Hamblen J)
Appointment of a receiver to bring protective claims against shareholder and former directors of a company by a potential creditor under an indemnity
18 December 2013
[2013] EWCA Civ 1629
Court of Appeal (Arden, Davis, Floyd LJJ)
Who pays the trustee's costs on an annulment?
The Court of Appeal considered the trustee’s recovery of costs following a successful application by bankrupts, Dr and Mr Oraki, for annulment of bankruptcy orders. The Court approved Redbridge LBC v Mustafa [2010] EWHC (Ch) 1105), identifying four types of costs to be considered when a bankruptcy is annulled:
Landlords will be relieved that the Court of Appeal has closed a legal loophole in a test case arising out of the administration of the Game group of Companies – Pillar Denton Ltd & 5 others v (1) Jervis (2) Maddison (3) Game Retail Ltd [2014] EWCA Civ 180.
Snapshot
The Court of Appeal’s judgment in Jervis v Pillar Denton Limited (Game Station) [2014] EWCA Civ 180 on 24 February 2014 has brought welcome clarity to when rent qualifies as an administration expense.
The Court of Appeal has ruled that: