The Court of Appeal has ruled that computer games retailer
Game has to pay around £3 million in unpaid rent to landlords, following the
latest part of the legal battle related to rent not paid while the company was
in administration.
The case related to the decision in 2012 to place Game into
administration a day after a rent quarter day, which meant administrators were
not obliged to pay rent to landlords including Land Securities, Hammerson and
British Land during the first three months of occupation. However, the landmark
decision made in the Court of Appeal closes the legal loophole which the case
revolves around, meaning the retailer is liable to pay the outstanding rent.
Following the ruling, Game said the decision would have a
“significant financial impact” on landlords, tenants and insolvency
practitioners and added that an appeal to the Supreme Court was under
consideration. Duncan Grubb, Head of Credit at Hammerson, added that the
judgment provided “a workable, common sense resolution to the payment of rent
as an administration expense”.
Christopher Perrin, a property litigation specialist at law
firm Irwin Mitchell, said: “Game’s administrators had avoided paying rent as a
result of the landmark Goldacre and Luminar decisions, which led to a common
practice of companies being placed in administration just after a rent payment
date – which mean administrators could get up to three months of use of
premises before rent becomes their expense. Today’s ruling has provided vital
clarity to this area, closing the loophole and ensuring landlords are on a
surer footing when it comes to administrations. However, it will be interesting
to see whether the case is now taken to the Supreme Court for an absolute final
decision on this vital issue. The outcome of the appeal means administrators
will be required to pay rent as an expense of the administration calculated on
a daily basis, as long as they occupy and use the premises for the benefit of
the creditor”.
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