Pre-Administration Rents - The Luminar Judgment: The Detail

In our Law-Now of 4 April 2012 ( click here for link), we reported on the decision of the court in the case of Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (in administration).  The detailed judgment has now been released, setting out the rationale for the decision and summarising the position on rents in administration generally.

The legal position on this issue is now:

• Where rent is payable in advance (whether quarterly or monthly) and falls due for payment prior to the commencement of a liquidation or an administration then, whilst it ranks as an unsecured claim, it will not rank as a liquidation or administration expense (i.e. in priority to other creditors), even if the liquidator or administrator retains the property for the purposes of the liquidation or administration for any part of the quarter or month for which the advance payment was due.