Tenants In Administration

Charles Russell have recently acted for landlords in the high profile administrations of Game and Blacks, in both cases managing to get not just the rent paid but also achieving forfeiture.

With further administrations likely, particularly immediately following each quarter date, this article sets out a landlord's choices when faced with a tenant in administration, focussing on the two issues that concern landlords the most:

Will my rent be paid? Can I get the property back? Moratorium

The administration process starts when the tenant files a Notice of Intention to appoint an administrator. As soon as this is done, the tenant is protected by a moratorium which prevents any action being taken by creditors. This means that a landlord cannot distrain on rent or forfeit against a tenant in administration unless the landlord either gets consent to do so from the administrator or permission from the court.

Administrator's strategy

An administration in the sense of a property portfolio is usually a restructuring exercise. The administrator will separate out the profitable stores in the portfolio from the nonprofitable stores. The first thing a landlord should do therefore is ask the administrator whether he is prepared to pay rent as an expense of the administration. In response the administrator will usually offer a surrender of the non-profitable stores.

The administrator will however wish to continue to use the profitable stores. In that situation it used to be that the administrator would offer to pay rent as an expense of the...