Pictured above: Andy Higgs, building consultancy
partner at King Sturge in Birmingham
A recent High Court (TBC) ruling relating to Administrators
having to pay rent when using premises for the benefit of Creditors
will have far reaching effects for both Landlords and
Administrators, says leading property experts King Sturge.
Andy Higgs, building consultancy partner at King Sturge in
Birmingham says that there are several important things to note.
The Administrator now has to pay rent for the whole of the
building, even when only part of it is being used and this means
the Landlord cannot rent out the unused part of the building.
Landlords and Administrators should also be aware that it could now
be argued that it is a logical extension of the judge's finding
that if an Administrator pays rent as a part of a contract then he
also has a responsibility for the other terms of that contract.
Andy explains: "Other liabilities could include things such as
dilapidations and whilst it was not an issue in this case it does
cause uncertainty.
"It is far from clear at the moment whether the Administrator
will be liable for more than just payment of the rent but the
implications may be that Administrators could be faced with a bill
that runs into hundreds of thousands whilst Landlords could find
themselves due the same.
"There could be another negative consequence to this in that a
company that finds itself in administration may become unviable
because alternative procedures such as Compulsory Voluntary
liquidations will be favoured."
King Sturge advises that any Landlord or Administrator that
finds themselves in this situation should seek professional advice
at the outset to determine any potential dilapidations liabilities
both pre and post administration.
Andy comments: "We have seen little comment on this issue and
believe that Administrators are not yet fully aware of their new
obligations and potential increase in liability. It is likely that
the dilapidations issue will be reviewed but until then we would
urge caution. "