Q&As

Where a commercial tenant goes into administration, will the administrator that is appointed be liable for rent due under an existing lease?

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Published on LexisPSL on 05/09/2016

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • Where a commercial tenant goes into administration, will the administrator that is appointed be liable for rent due under an existing lease?
  • Case Study
  • The issue of rent
  • The issue of client costs

Where a commercial tenant goes into administration, will the administrator that is appointed be liable for rent due under an existing lease?

STOP PRESS: From 6 April 2017, the Insolvency Rules 1986, SI 1986/1925 were revoked and replaced by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. The content in this Q&A may have been affected by this change.

Case Study

A tenant and its guarantor have gone into administration. The shop in the premises has ceased trading and is now empty. The landlord has incurred wasted costs for a new tenant the administrator found but which has fallen through. Can the landlord reclaim rent and wasted costs from the administrator?

The issue of rent

Following the case of Re Game Station, also known as Pillar Denton v Jervis, the administrator will only be liable for payment of rent (as an expense of the administration) for the period following their appointment where the administrator has used the property for the benefit of the administration. Use in this context will be dependent on the facts of your case and what actions the administrators took following their appointment. Where the administrator has used the property, rent will accrue on a daily basis in accordance with rent amount specified in the lease and end on the day the administrator ceases using the property.

For further details, see Practice Note: Pre-packs—landlords’

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