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.

LONDON - The Court of Appeal in the case of Re Game Station¹ has held that rent payable by a tenant that enters administration is a priority expense of the administration while the leasehold premises are being used for the benefit of the administration.

Last week I blogged about the Capital Gains Tax consequences of undervaluing property. This blog will look at another situation when undervaluing property or shares could lead to future exposure in an insolvency situation.

This week the Court of Appeal has heard the long awaited appeal in Jervis and another v Pillar Denton Limited (Game Station) and others, better known as the Game Station case, which (depending on the outcome) may trigger a drastic change to the way in which rent in administration is treated.

What happens to funds held in escrow when the paying entity goes into administration?

The background

Escrow mechanisms are familiar territory for most practitioners. The case of Bristol Alliance Nominee No. 1 Ltd and others v Neil Andrew Bennett and others [2013] EWCA Civ 1626 explores what happens when funds are held in escrow at a time when the paying entity goes into administration.

The Court of Appeal has today handed down judgment in the hugely anticipated litigation involving the Game group of companies, deciding that, where a company goes into administration and continues to trade from property, rent will be payable on a daily basis for the period during which the company actually occupies the premises.

Michael John Andrew Jervis v Pillar Denton Limited (Game Station) and others [2013] EWHC 2171 (Ch) (“Game”)

Game has come to the courts against the background of two previous High Court decisions on the treatment of lease rents in administration. Recent decisions on this point have arisen out of cases where landlords made claims for rent in the administration of tenant companies.

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.

The Court of Appeal has handed down an important judgment for landlords and insolvency practitioners, in the case of Jervis v Pillar Denton; re Games Station (“Game”).