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”.

In the recent case of Schroder Exempt Property Unit Trust v Birmingham City Council, the High Court has confirmed that it is the landlord who is liable to pay business rates for an empty property following disclaimer of the lease by the tenant’s liquidator.

Under the Local Government Finance Act 1988, the person “entitled to possession of the property” is liable for rates.

The court held that, following disclaimer, the landlord had an immediate right to possession even though it had not actually taken possession of the property.