www.company-debt.co.uk

[Robin Massey]

Hello, could you please tell me when a company goes into administration who is responsible for paying the rent arreas to the landlord?

[Graham Wilson]

Hi there Robin and welcome

Once a company goes into administration, if the business continues to trade the administrator guarantees the ongoing payment of the rent moving forward. However, rent arrears built up in the past are not guaranteed and remain a debt owed by the business.

[Derek Cooper]

Hello Robin

Unfortunately whether or not any rent arrears are paid will depend on the recomendation of the administrator who is dealing with the company. If the administrator decides that the company should be closed (liquidated), then I am afraid that any rent due will not be paid. The landlord will become an unsecured creditor and will probably lose out together with any other unsecured creditors.

If the intention of the administrator is to maintain the business either through restructuring or perhaps implementing a company voluntary arrangement, the landlord will be treated as a normal creditor and negotiation about if and how arrears are repaid will take place.

As Graham has said, if the company continues to trade while in administration, ongoing rental payments will be guaranteed by the administrator.