Jurisdiction(s):
United Kingdom

Re London Bridge Entertainment Partners: rent deposit drawdown prevents Lundy Granite rent expense; 'top-up' claim provable only (England and Wales)

Published on: 19 November 2019

Published by a LexisNexis Restructuring & Insolvency expert

Legal News

Article summary

Re London Bridge Entertainment Partners illustrates how choices that appear trivial in solvency can become pivotal on insolvency. In this instance, opting to ‘pay first, query later’ from the rent deposit meant the landlord effectively relinquished the priority it might otherwise have enjoyed for those rent sums. The judgment also confirms that the scope of provable debts is interpreted broadly, whereas the category of administration expenses is construed narrowly. Written by Samuel Parsons, barrister at Guildhall Chambers. Re London Bridge Entertainment Partners LLP (in administration) [2019] EWHC 2932 (Ch), [2019] All ER (D) 96 (Nov)

What are the practical implications of this case?

This decision underscores the caution required when a commercial counterparty cannot pay. It was common ground that, had the rent for the period of the administrators’ beneficial retention remained outstanding, it would have constituted an expense of the administration [18]. The creditor landlord could therefore have obtained a significant priority in the administration for those amounts. However, by drawing down the deposit to satisfy the rent, that priority was effectively surrendered...

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