Rent as an administration expense - Goldacre
Date: Tuesday 15th June, 2010
Author: Chris Laughton
Profile: Chris Laughton
Commercial landlords and insolvency practitioners are all alive to the effects of the decision of HHJ Purle QC in Goldacre (Offices) Ltd v Nortel Networks UK Ltd  EWHC 3389 (Ch) (07 December 2009), that rent is an administration expense when it falls due during the administration.
Gabriel Moss QC has however written a fascinating analysis in Insolvency Intelligence ((2010) 23 (5) Insolv. Int. 76), concluding that Goldacre failed to follow the Court of Appeal's approach to administration expenses in Re Atlantic Computer Systems plc, which he says was unaffected by the House of Lords decision in Re Toshoku Finance (UK) plc (in liquidation). Accordingly, he argues, the court retains a discretion whether or not to treat rent, a pre-administration liability arising at the time the lease was executed, as if it were an administration expense.
Goldacre's consequences were not an obvious triumph for the rescue culture and perhaps were due to a logical flaw. Can we now return to the common sense of the courts' discretion?
Keywords: rent "administration expense" Goldacre "Insolvency Intelligence" "Atlantic Computer Systems" Toshoku
Please note that the opinions expressed in this blog represent the views of the author and not the views of Mercer & Hole.