Rent as an Administration Expense - Sorted Once and For All?

Originally published April 3, 2012

Keywords: rent, landlord, tenant, administration expense, unsecured debts, Goldacre v Nortel Networks UK, insolvency,

The High Court has provided clarification on the issue of payment of rent during a tenant company's administration.

Judge Pelling QC ruled that rent that fell due to a landlord prior to the appointment of administrators should not be treated as an expense of the administration having priority over the claims of unsecured creditors.

The landlord in the case¹ took legal action earlier this year against the administrators of its tenant in an attempt to challenge the controversial decision of the High Court in the 2009 case of Goldacre v Nortel Networks UK. The landlord was seeking to recover the rent arrears in priority to the tenant's other unsecured debts when rent is not paid on the quarter day and administrators are subsequently appointed who continue to trade the tenant's business.