GAME changer for rent in administration

Noun
A form of competitive activity played according to rules.
Verb
Manipulate (a situation), typically in a way that is unfair or unscrupulous.

How apt these definitions seem now the Court of Appeal has restored what, to many, is the equitable position, overturning the High Court decisions in Goldacre (Offices) Ltd v Nortel Networks UK Ltd and Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd. In short, tenants who now continue to trade through an administration process are liable for rent accruing on a daily basis and must pay from the outset, regardless of which side of the rent quarter date the administration process starts. No more 3 month rent free periods for administrators attempting to rescue businesses.  

Whilst the Court of Appeal's decision is clearly a good one for the consortium of former landlords of Game stores, not only mirroring the liquidation regime but also reflecting what a lot of people would regard as the common sense position, the wider implications for institutional and private landlords are less certain.  

Anecdotal evidence suggests that the decision to continue to trade in administration has, for the last few years, often been influenced by the ability to time the appointment after a quarter day, thereby creating a window of opportunity to market a business for sale without having to bear the cost of a quarter’s rent. Jobs have been preserved and, in some instances, both landlords and other suppliers have been provided with a successor company with whom to do business. This is the essence of the rescue culture. However, the Court of Appeal's recent decision will alter that balance.

Whilst the landlords of insolvent businesses trading in administration will now be better off on a case by case basis, the broader picture may be that more leasehold properties will be vacated on day-one of an administration, leaving the landlords high and dry for an extended period. There may also be an increase in the number of liquidations offering insolvent companies the opportunity to disclaim leases, thereby forcing the burden of the non-domestic rates liability and other void property costs back on to the landlords.  
 
So as to who has really won the game, the situation is not as clear cut as one may think and only time will tell.

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