The government has indicated that it will raise the financial threshold for creditors petitioning for an individual's bankruptcy through an amendment to the Insolvency Act 1986. From 1 October 2015 a creditor will need to be owed at least £5,000, rather than £750 as at present. This change, coming very shortly after the recent abolition of the remedy of distress, will inevitably serve to further limit landlords' armouries when attempting to recover arrears from tenants.

In Spencer Day v Tiuta International Ltd and other [2014] EWCA Civ 1246, the Court held that a creditor who relies on subrogation is still a secured creditor, and therefore cannot be subject to a set off claim for unliquidated damages as per Natwest v Skelton (1993).

Background

The news that USC has taken steps to commence an insolvency process is further proof (if proof were needed) that despite what TS Elliot may have claimed, January really is the cruellest month. 

It is now settled law that when an Administrator retains occupation of leasehold property on the basis that it will benefit of the company’s creditors, rent that relates to that period of occupation must be paid by the Administrator as an expense of the administration.

The High Court ruling in Schroder Exempt Property Unit Trust and another v Birmingham City Council [2014] EWHC 2207 provides helpful clarification on whether or not a landlord is liable  to pay business rates on an empty property following the liquidation of a tenant and the subsequent  disclaimer of the lease.

Background

We are hoping to take on new premises that are currently occupied by the administrators of the previous failed tenant. They will not give an indication of when they intend to leave and this is holding up our own plans. Is there anything we can do to force the administrators to tell us when they will vacate the premises?

Moving to new premises is always stressful, and having to wait for an administrator to vacate is only going to compound the matter. This is increasingly common and can take quite some time to resolve.

The Supreme Court has recently declined to hear retailer Game’s appeal, ruling that there was no arguable point of law of general public importance which ought to be considered, particularly bearing in mind the case had already been the subject of judicial decision and reviewed on appeal.

“… permission to appeal be refused because the application does not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court…”

In recent Court decisions, the balance between Administrators and Landlords has shifted backward and forwards with great regularity. Both sides have just learned that the goal posts have moved once more.

The judgment from a unanimous Court of Appeal last week has overruled the previous authorities on the issue of whether rent is payable as an expense in an Administration. In light of the decision in Jervis v Pillar Denton Ltd and Others, the decisions in Goldacre and Luminar are no longer of any effect.

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.