Great news for commercial landlords

There is always a conflict between treating creditors of an insolvent company fairly and allowing insolvency practitioners sufficient leeway to facilitate a disposal of a business as a going concern. The general view is that such a disposal will always produce a better result for the creditors than the simple asset sale approach of a liquidation. Over recent years, this conflict has given rise to increasing tension between joint administrators trying to package up the profitable elements of high-street retail businesses and commercial landlords who want the rent to be paid if the tenant business continues to trade from the landlord’s premises under the protective bubble of an administration.

Two recent decisions — Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] and Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd [2012] — have swung the pendulum of convenience towards insolvency practitioners and away from commercial landlords. Enshrined principles have allowed insolvency practitioners to duck and dive using old common law rules applied to the payment of an annual rent on a quarterly basis…

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