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The Game Is Over... Well Played

The Game Is Over... Well Played

The highly-anticipated appeal judgment in the Game Stores case (Re Game Stations [2013] EWHC 2171 (Ch)) was today handed down by the English Court of Appeal (as yet unreported), which landlords across the UK will welcome as closing a legal “loop-hole” in the administration process.

Game collapsed into administration on 26 March 2012, one day after its quarterly rent payments were due to be paid to various landlords in respect of hundreds of stores – reportedly costing the landlords £3 million in lost rent and service charge.  Five days later the company was sold to a private equity firm and re-emerged as “new Game”, being given permission to trade from the premises by the administrators without any rent being paid.  

Relying on the earlier cases of Goldacre (Re Goldacre [2009] EWHC 3389 (Ch)) and Luminar (Re Luminar Lava Ignite [2012] EWHC 951 (Ch)), the company’s administrators and “new Game” took the view that no rent was payable for the whole of that quarter, despite “new Game” continuing to use and occupy 300 stores for all but one day of the quarter (and beyond). 

As a result, a consortium of the UK’s largest property companies raised an action in the High Court in London against “new Game” and the administrators (who took a neutral stance in the appeal) seeking to overturn the decisions of Goldacre and Luminar.

The Court of Appeal decision has overruled both Goldacre and Luminar. The result is that administrators (and liquidators) are liable to pay rent as an expense of the administration (or liquidation), but only for the actual time they use the premises, with rent accruing on a daily basis.  There will be no discretion to administrators and the rent quarter days have no bearing on the matter.

Rachael Gibson
Associate

LChalmers