Further to my article last week, we have today learned that the Court of Appeal has found in favour of landlords in the much anticipated case of Jervis & Others v Pillar Denton and Others (the Game administration).
To recap: Game entered administration one day after its quarter rent date fell due in March 2012 and its administrators relied on previous case law (Goldacre and Luminar) that they were not liable to pay sums that fell due (rent and service charges) prior to their appointment, as an administration expense. The landlords would have to prove for those sums in the usual way as unsecured creditors.
The landlords challenged this and today succeeded. Accordingly, we will now be dealing with a ‘pay as you go’ scenario in which, if the administrators are using the leasehold premises for the purposes of the administration, rent and service charges will be payable as an administration expense for the period in which they are in occupation.
This is a landmark decision which will have huge ramifications for both administrators and landlords. Landlords will naturally be pleased to see their position ameliorated in the current insolvency regime. At first glance, it is a blow to administrators and other classes of creditors as there will be less sums to distribute after having satisfied landlords. However, at least administrators will have certainty of their rental liabilities, if they occupy the premises for the purpose of the administration. This may not be the end of the matter, however, as an appeal to the Supreme Court is being considered.
If you could be affected by this decision or wish to know more then please do not hesitate to contact Paul Goss.
Learn more about DMH Stallard’s Corporate Recovery and Insolvency Team.
Under existing insolvency law, if a company is placed into administration after a quarterly rent date falls due, even if by just one day, then Landlords will not be entitled to that quarter rent as an administration expense but will rather have to prove in the administration as an unsecured creditor. This effectively provides administrators a ‘rent free quarter’ in order to try and achieve a sale of the business prior to the next quarter date.
GAME, which entered into administration one day after its quarter rent date fell due in March 2012, have been taken to the Court of Appeal by a consortium of Landlords to argue that this ‘loop hole’ should be closed and that GAME ought to pay them the, circa, three months outstanding rent as an expense of the administration.
This is very much viewed as a test case that could determine how rent in this intervening period (post quarter rent date to next quarter rent date) is to be treated in future administrations. The Daily Telegraph states that the case could affect GAME’s proposed flotation as if the consortium succeeds then GAME and its backers will have “to pay out roughly ten per cent of its current annual rent and service charge bill”.
A number of Landlords are of the opinion, especially after being the only category of creditors affected under a number of high-profile Company Voluntary Arrangements we saw last year, that it is time that their position is better protected under the current insolvency regime. If the Landlords succeed in their challenge then this will be one major feather in their cap. It will also bring some clarity to when rent is, and is not, an administration expense and may well sound the death knell on the use of tactical administration appointments. More to follow….
By Paul Goss
One of the frustrating things about being an engineer is that so often the general public assume engineers are part of the “oily rag brigade”. In fact the usual image of engineering, along with the assumption that it’s all done abroad, is that it involves some sort of gear wheel or someone wearing a hard hat.
I recently had the good fortune to visit a company in Croydon as far away from that imagery as one could imagine. SLE design and manufacture infant and neonatal ventilators, specifically designed for the treatment of respiratory compromised and premature babies, providing assisted ventilation for them.
The ventilators aren’t the Perspex “box” the baby is put in, rather the equipment that regulates, assists and controls the breathing of the baby.
The equipment monitors the baby’s breathing and supplies the optimised mixture of gases in sequence with the baby’s breathing to make sure the baby is comfortable. Pure oxygen isn’t used as this can cause blindness in infants.
I was amazed when Managing Director, Bernard Nelligan told me that, not only are a premature baby’s lungs delicate but that the capacity can be as low as 5ml. That’s the volume of a teaspoon! So achieving the right gas exchange in the lungs without causing injury and distress as the baby breathes is a very impressive achievement.
SLE dominate the UK market and also export over 90% of their output to countries all over the world including emerging markets. All products are designed and made by the team in Croydon and have been significantly improved over recent years to embrace modern display technologies. Add to this a reputation for delivering products that are safe and reliable, you can see why SLE goes from success to success. In fact they have provided life saving assistance to millions of children all over the world.
As a person who’s passionate about engineering in the UK, it’s fantastic to know that UK businesses like SLE are leading the way in exporting world class products, that are not only designed in the UK but also manufactured here too.
Perhaps the more we know about companies like SLE, the more we will dispel the incorrect assumptions about modern manufacturing in the UK.
By David Seall
Re-aligning the operational side of your business and responding to the changing demands of your customer
Following my previous article on how manufacturers exposed to the public sector have coped with Government austerity programmes, I had the pleasure of visiting Eschmann recently. Eschmann is a South-East based company that specialises in the design and manufacture of operating theatre equipment, dental decontamination devices and consumables.
As an award winning British manufacturer, based in Lancing on the West Sussex coast, Eschmann has played a significant part over the past four years in the rebuilding of the Iraqi healthcare infrastructure. However, securing successful contracts of this nature is not unusual for this global performer. With over 180 year’s experience, this no doubt becomes one of the primary reasons for explaining why the company continues to flourish in tough economic climates.
Performing well over the past five years has meant the company has had to look closely at its processes. Eschmann has taken a dynamic approach to the operational aspects of its business, whilst simultaneously adapting to changes driven by various healthcare sector procurement agencies, which are under pressure to deliver greater value for money from depressed or even dwindling budgets.
As tax payers we should all be pleased that public sector spend is being effectively managed. But, as a nation we need to be mindful that such a strategy does not prevent our own home grown businesses from making investment in innovation and manufacturing that is vital to allow British companies to continue to compete effectively, both at home and abroad.
To survive and indeed prosper in today’s healthcare sector, especially in the face of a disorganised domestic procurement process – many NHS trusts are faced with a situation that at best remains fragmented. In response to this, Eschmann have focussed on realigning how it operates in order to continue to deliver on its core values and meet the demanding needs of its healthcare customer.
The focus that Eschmann, with over 200 employees, has placed on the design and development of healthcare solutions has resulted in a new product development programme that will allow it to compete even more successfully. This will allow them to compete not only within its existing markets, but also expand significantly into new global markets who seek high quality, technologically rich products yet have a strong eye on achieving real value for money, Iraq being a distinct case in point.
By David Seall
127 companies from South East England are covered by the report, the most for any region apart from neighbouring Greater London (267 companies), including 24 engineering, defence and aerospace and 23 technology, media and communication businesses. The report contains profiles of Southampton-based Bowman Power Group, AIM-listed Judges Scientific of East Grinstead, Guildford’s specialist eye care hospital group Optegra and Childrensalon of Tunbridge Wells, fleshing out some of the success stories right here on our doorstep.
I found last Friday’s event, and the accompanying report, really uplifting. As a firm believer in, and supporter of, SMEs in the South East, I agree with Xavier Rolet that more needs to be done to raise awareness of the importance of these fast-growing businesses.