Payment Of Rent In Administration

While the number of company administrations has not changed significantly in recent years, the question of whether rent should be paid by the administrator of the company has become increasingly controversial.

By way of background, if the premises have been retained to enable the administrator to continue running the company's business or otherwise for the benefit of the administration,  then the rent is payable as an "expense" of the administration.  The effect is that the rent is payable in priority to the claims of other creditors and, indeed, in priority to payment of the administrator's fees.  Traditionally, the principles for payment of rent were understood to follow the rules which applied to liquidations, with the Court having a discretion as to the extent of the liability.  The element of discretion was understood to allow an administrator to only pay for the period that the premises were actually used, regardless of when the rent fell due.  However, this