When should administrators pay the rent? by Willie Manners & Eleanor Morgan
At the end of last year, the High Court handed down its decision in Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] EWHC 3389 (Ch), [2010] All ER (D) 54 (Jan). The court had to consider what payment was due in respect of rent where the administrator had used a small part of premises let to a company in administration.
Following Re ABC Coupler and Engineering Co (No 3) [1970] 1WLR 702, it is well established that if an administrator occupies an insolvent company’s premises for the conduct of the administration, this use is for the benefit of the insolvent company’s creditors and any rent falling due after the date of the winding up order will be payable as an expense of the administration during the period of such use.
Rent will, therefore, be paid by the administrator from the assets of the company before paying preferential creditors, creditors with floating charges or unsecured creditors. In practical terms for the landlord, this means that he is likely
