Insolvent Company’s Liability to Pay Rent

The Court of Appeal has revisited the question of when an insolvent company’s liability to pay rent will rank as an expense of its administration or liquidation.

It held that an administrator or liquidator must pay the rent arising in respect of property leased by the company, for any period during which the administrator or liquidator retains possession of the premises for the benefit of the administration or liquidation. This period is determined as a question of fact.

The rent due for such period should be treated as accruing from day to day. Although the case concerned an administration, the Court of Appeal was clear that the same principles would apply in liquidation.

The Court of Appeal has therefore overruled Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] EWHC 3389 (Ch) and Leisure (Norwich (II) Ltd v Luminar Lava Ignite Ltd [2012] EWHC 951

Pillar Denton Limited and Ors v Jervis, Maddison and Game Retail Limited [2014] EWCA Civ 180.

Written by James Naylor

Partner, CG Naylor LLP.