Game’s landlords win key case on rent owed by collapsed firms
COLLAPSED retailers must pay to use their shops even if the rent bill was due before they failed, the Court of Appeal said yesterday, marking a major change to the way retail administrations are handled.
Landlords for Game Group, which filed for administration the day after its quarterly rent was due in March 2012, are entitled to £3m in rent payments, the court found.
Under the rules at the time, PwC was free to ignore Game’s rent bill as it was not considered an administration expense.
This gave Game three months rent-free while parts of the business were sold on to private equity group OpCapita – providing breathing space while the newly-created Game Retail recovered, but leaving landlords including British Land, Hammerson, Intu and Land Securities out of pocket.
The Court of Appeal said that a “pay as you stay” rent bill would be fairer on both sides.
Michael Metliss, the lawyer at Berwin Leighton Paisner who acted for the landlords, said the decision “should bring welcome clarity to what has become a contentious area of law in recent years”.
Game Retail said it has already accounted for the rent in last year’s results. The firm is considering an appeal to the Supreme Court.