Game poised for courtroom battle over unpaid rents

Landlords including Land Securities, Hammerson and British Land claim they missed out on the rent after Game plunged into administration in March 2012 and the case is set to reach the Court of Appeal on Wednesday, according to The Telegraph.

The case comes at a critical time for Game, which is considering a £300m floatation. Game was bought out of administration by controversial banker Henry Jackson’s OpCapita, backed by hedge fund Elliot Advisors. Almost 300 Game stores were closed by administrators.

However a strong console and games release schedule has helped Game return to form with like-for-likes soaring 90% over Christmas.

If the landlords are successful, Game and its backers could have to pay out roughly 10% of its annual rent and service charges.

The hearing is being viewed as a “test case” and could lead to changes into administration practice in the UK, giving greater priority to landlords.

Landlords claim that the “new Game” was able to operate rent-free for three months because of a legal loophole in the administration process.

Under the existing law, rent that is due during an administration is payable as an expense if the business continues to use the property.

However, if a company files for administration just before quarterly rent day and administrators are appointed within 10 days, the rent can legally go unpaid.

Game appointed PwC as administrator the day after it was due to pay rent for the next quarter.

The landlord consortium is being advised by Berwin Leighton Paisner, while “new Game”, which will argue that the law should be upheld, is being advised by Macfarlanes.