The corporate tenant became insolvent, but the administrators continued in occupation. The parties now disputed whether the rent (payable in advance) was a provable debt or an administration expense.The court was asked whether a company in administration was liable to pay a quarter’s rent as an administration expense even though the amount had fallen due for that quarter the day before the company had entered into administration.
Held: It was. The administrator was obliged to make payments at the rate under the lease for the period in which he remained in possession. Such liabiliy should be calculated from day to day, and the rent payable under this calculation was a mere question of fact which was not determined by the fall of the rent days.
Lewison LJ said: ‘The true extent of the principle, in my judgment, is that the office holder must make payments at the rate of the rent for the duration of any period during which he retains possession of the demised property for the benefit of the winding up or administration (as the case may be). The rent will be treated as accruing from day to day. Those payments are payable as expenses of the winding up or administration. The duration of the period is a question of fact and is not determined merely by reference to which rent days occur before, during or after that period.’
Patten, Lewison, Sharp LJJ
[2014] EWCA Civ 180, [2014] WLR(D) 94, [2014] 2 All ER (Comm) 826, [2014] 3 WLR 901, [2014] BCC 165, [2014] 3 All ER 519, [2015] 1 Ch 87, [2014] 2 BCLC 204
Bailii, WLRD
Insolvency Act 1986 SchB1.43
England and Wales
Cited by:
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, Insolvency
Updated: 02 November 2021; Ref: scu.521564
