Tenant in Administration?
In a recent High Court case it was held that an administrator of an insolvent tenant company was obliged to pay rent to the landlord under the lease for a property it continued to occupy, but only where the rent payment date fell after the date of the administration.
The Landlord was unable to forfeit the lease for non-payment of rent as where a company goes into administration, the Insolvency Act provides for a statutory moratorium to prevent actions or claims against the company, to give the administrator time to attempt to salvage the company. The Landlord therefore applied to court for leave to forfeit based on non-payment of rent. Consent was given but the Landlord’s claim was ultimately rejected.
A problem for landlords is that administration appointments may therefore be timed for just after a rent payment date to effectively allow the administrator a rent free period of almost 3 months.’