3 million in back-rent.
GAME UK has lost what has been deemed to be a landmark case and must now pay hefty dues as a result. While they are currently appealing against the verdict of the case in higher courts, if the decision were to remain the same, they would have to pay several landlords £3 million in back-rent for which, the case claims, they were already accountable for. This goes against the general rule that companies don’t have to pay rent while proceedings are active.
“The real ramification of this decision is, however, that it will have a significant financial impact on all landlords, tenants and insolvency practitioners involved in current and future business insolvencies in this country,” Game UK said in a statement.
“The previous system was deeply unsatisfactory for both landlords and insolvency practitioners and this judgement provides a workable, common sense resolution to the payment of rent as an administration expense,” said Hammerson’s head of credit control Duncan Grubb. “This judgement will significantly change the relationship between landlords and insolvency practitioners, and will hopefully lead to more collaboration when dealing with critical situations.
“Corporate restructuring will now be focused purely on trading patterns and the viability of the ongoing business, rather than on rent free periods from landlords provided by a legal loophole.”
Stay tuned, we’ll keep you in the loop as more details come our way.