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27/06/2013

Rent Quarter Day - R3 comments

Following the announcement that three retailers have filed a notice to appoint administrators after the latest Rent Quarter Day, Giles Frampton, vice-president at R3, the insolvency trade body says:

 
“Retail administrations have spiked after every Rent Quarter Day over the last year. This is hardly surprising given the prevailing case law on administration expenses.” 
 
“The current rules on these are a bad deal for businesses and a bad deal for landlords.”
 
“If rent falls due in an administration it qualifies as an administration expense, which must be paid in full before creditors’ claims are dealt with. Administration appointments may therefore be delayed until the quarter day has passed.”
 
“Furthermore even if an administrator only uses a small part of the business property for a short time during the administration, full rent may still be payable.”
 
“The rules on administration have developed haphazardly over time, and seem to have lost sight of a reasonable ‘pay for what you use’ principle. This has pushed the administration expenses bill higher and higher.”
 
“The potential size of administration expenses has pushed Insolvency Practitioners towards liquidations or pre-pack administrations where a trading administration might otherwise have been appropriate.”
 
“The current rules put jobs at risk and reduce returns to creditors – including landlords.”
 

For more information, please contact:

 
Nick Cosgrove, Communications Manager R3
0207 566 4215
 
Victoria Jonson, Director of Communications R3
0207 566 4223
 
 

 

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.