LANDLORDS and computer games seller Game will head to the Court of Appeal this week to find out whether the retailer owes rent for the first three months after its collapse into administration in March 2012.
Four of the country’s biggest shop landlords – Hammerson, British Land, Intu and Land Securities – argue that the current laws on administrations unfairly favour struggling tenants.
The companies claim that they should be paid rent for the quarter, which began a day before Game Group called in PwC to act as administrator.
The current rules mean landlords can only take rent as an administration expense if it becomes due after the firm collapses.
This leaves a loophole where retailers are not obliged to pay if they file for administration just before a quarterly rent bill and administrators are appointed within 10 days.
Landlords hope the rules will be changed to allow pay-as-you-go rent rates during administrations and avoid the risk of hefty quarterly bills being paid or lost unfairly.
Game, which is reportedly gearing up for a flotation following strong Christmas sales, was bought out of administration by OpCapita and other backers in April 2012, a week after the firm said it intended to appoint administrators.
If the Court of Appeal finds in favour of the landlords, Game could be forced to pay out around 10 per cent of its current rental bill to cover the first quarter of its administration, totalling millions of pounds.
Game Group had more than 600 stores when it folded. Private equity group OpCapita bought around half of its outlets and turned Game Retail, its successor, into a venture that posted a 90 per cent rise in store revenues over Christmas.
The landlords are being advised by Berwin Leighton Paisner, while Game is advised by Macfarlanes. Linklaters is also appearing on behalf of PwC.