chester

Chester 01244 405 555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

shrewsbury

Shrewsbury 01743 443043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Slide e

Airport City, Manchester 0161 537 3324

Offices 204 and 205
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

30th August, 2012

Pre-Administration Rents Not Expenses of Administration


When a tenant becomes insolvent and the administrator intends to carry on trading from the rented premises, the administrator takes over responsibility for the payment of rent to the landlord from the commencement of the administration.

Typically in such cases, rent arrears have built up and this can lead to arguments over whether payments made by the administrator relate to the ‘post-administration’ period or the ‘pre-administration’ period. The difference is important for landlords, because ‘administration rents’ (i.e. those for which the administrator is responsible) must be paid before other debts.

In a recent case, an administrator and a landlord went to court regarding rent arrears built up by the insolvent tenant. The administrator was appointed just after the normal quarter day rent was due. The landlord argued that the arrears of rent arising before the appointment of the administrator were ‘administration rents’ and therefore stood at the ‘head of the queue’ for payment.

The administrator’s argument was that the arrears were not administration expenses and therefore ranked equally with amounts owing to other creditors of the insolvent company.

The administrator was successful.

“With trading conditions still tough, landlords need to be extremely careful and vigilant over the payment of rents by tenants in difficulties,” comments Giles Williams. “Ongoing review of the payment position is key to minimise potential loss and future dispute.”

Contact Giles Williams on any Commercial Property matters at [email protected]

 

 

 



You might also be interested in...

New Measures Announced to Control the Number of Second Homes in Wales

9th August, 2022

Concerns surrounding the rising number of second homes has forced the Welsh Government to act. In July a... Read More »

Employment Law Newsletter – August 2022

5th August, 2022

Welcome to the latest edition of our Employment Law Newsletter. If you would like discuss any of the... Read More »

What the Decision on Holiday Pay for Part-Year Workers Means for Employers

2nd August, 2022

The Supreme Court has recently issued its long-awaited decision in the case of Harpur Trust v Brazel. This... Read More »

Contact Us