Leisure (Norwich) II Ltd & Ors v Luminar Lava Ignite Ltd [2012] EWHC 951 (Ch) (28 March 2012)

Leisure (Norwich) II Ltd & Ors v Luminar Lava Ignite Ltd [2012] EWHC 951 (Ch) (28 March 2012)

Where rent is payable in advance and falls due before the commencement of administration, it is provable but not payable as an administration expense, even if the administrators retain the property for the period covered by the rent. Only rent falling due after commencement and during retention is payable as an expense.

Citation
[2012] EWHC 951 (Ch)
Parties
Applicants/claimants: Leisure (Norwich) II Ltd & Ors; Respondents/defendants: Luminar Lava Ignite Ltd (in administration) & Ors
Jurisdiction
England and Wales
Judgment Date
28 March 2012
Procedural Posture
Application in Administration Proceedings / Judgment After Hearing of Applications for Permission to Forfeit Leases and for Payment of Pre Administration Rent as an Expense
Outcome
Application for payment of pre-administration rent as an expense dismissed; landlords awarded costs of the application for permission to forfeit.
Legal Topics
Administration Expenses, Forfeiture of Lease, Rent Payable in Advance, Priority of Payments in Insolvency, Assignment of Leases
Insolvency Landlord and Tenant Administration Expenses Forfeiture of Lease Rent Payable in Advance Priority of Payments in Insolvency Assignment of Leases

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Parties

Leisure (Norwich) II Ltd & Ors

Applicants/claimants

Luminar Lava Ignite Ltd (in administration) & Ors

Respondents/defendants

Procedural Posture

Application in Administration Proceedings / Judgment After Hearing of Applications for Permission to Forfeit Leases and for Payment of Pre Administration Rent as an Expense

Legal Issues

  1. 1 Whether rent payable in advance and due before commencement of administration is payable as an administration expense
  2. 2 Whether landlords are entitled to payment of pre-administration rent as an expense where administrators retain possession
  3. 3 Whether landlords are entitled to costs of the application for permission to forfeit

Ratio Decidendi

Where rent is payable in advance and falls due before the commencement of administration, it is provable but not payable as an administration expense, even if the administrators retain the property for the period covered by the rent. Only rent falling due after commencement and during retention is payable as an expense.

Court Disposition

Application for payment of pre-administration rent as an expense dismissed; landlords awarded costs of the application for permission to forfeit.

Orders

  • Administrators not required to pay pre-administration rent as an expense.
  • Administrators to pay landlords' costs of the application for permission to forfeit.