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Company Law

Analysis - guidance - compliance

25 APR 2014

PILLAR DENTON LIMITED AND OTHERS v JERVIS AND OTHERS

PILLAR DENTON LIMITED AND OTHERS v JERVIS AND OTHERS
Court of Appeal
Patten, Lewison, Sharp LJJ
24 February 2014

LEWISON LJ:
The issue
[1] The issue on this appeal is the treatment of rent payable under a lease held by a corporate tenant that enters administration. When is the rent no more than a provable debt; and when does it rank as an expense of the administration?
Background
[2] The question arises in the context of the administration of the Game group of companies. One of the companies in the group (“GSGL”) was the tenant of many hundreds of leasehold retail properties from which the group traded. In relation to most of those properties rent was payable quarterly in advance on the usual quarter days (25 March, 24 June, 29 September and 25 December). On 25 March 2012 approximately £10 million in rent became due under the various leases. It was not paid. The group entered administration on the following day. Some stores were closed down immediately; but trading continued in other stores which were included in a swift sale of the business and assets of the group to Game Retail Ltd, which was not part of the group. We were told that approximately £3 million of the March rent remains outstanding in respect of those stores.

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