Chester 01244 405555

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

Shrewsbury 01743 443 043

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

Manchester 0844 800 8346

Pall Mall Court
61-67 King Street
Manchester M2 4PD

Send us a message
Our Offices

Pre-Administration Rents Not Expenses of Administration

30th August, 2012

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...

Why there is more to CSR than just boosting a company’s ego

6th July, 2018

When a business invests in its community it deserves praise – but it must go beyond that, writes Helen Watson, a trustee at Claire House and partner at Aaron and Partners Solicitors. Corporate social responsibility (CSR) is the link between a company and the community in which it operates. As a trustee on charity boards including Claire House... Read More »

Stuart Haynes reports on IAG Global – Wiesbaden 14th to 17th June 2018

4th July, 2018

Stuart Haynes, Corporate & Commercial Partner and IAG Global Board Member, reports on IAG Global – Wiesbaden held 14th to 17th June 2018 Stuart Haynes (IAG Global Board Member) Stuart Scott-Goldstone and Nick Clarke attended the recent IAG Global meeting in Wiesbaden which was held at the Grand Hotel Nassauer Hof from 14th – and 17th July 2018 The meeting... Read More »

DNA Test ordered in inheritance dispute where paternity questioned

6th June, 2018

Rhiannon Edwards, Solicitor in the Wills, Trusts and Tax department, discusses the recent judgement in the case of Nield-Moir v Freeman, where the High Court has ordered one of two daughters of Colin Birtles, who has died, to take a DNA test to prove paternity as part of an inheritance dispute In an unusual case, the High Court... Read More »

Contact Us