Landlords appealed against GAME after the retailer operated rent-free while it was in administration last year.
The recent ruling will now see GAME pay out £3m in rent. This will have a significant impact on the insolvency industry, as well as the already embattled retail sector.
Under existing insolvency law, administrators can legally trade business in administration from the rented premises for as long as three months, protected from landlord enforcement action.
However, this recent ruling will now see that rent for any period of occupation during an administration will form part of administration expenses.
The rent will be treated as accruing daily, with the payments being payable as expenses of the insolvency process. A common sense approach.
This decision will now allow administrators to better plan and consider the value of the business irrespective of the date of appointment.
It’s good news for landlords. It’s good news for workers and it’s good news for creditors.
Source: Insolvency News