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Why landlords might benefit from monthly rents

20 January 2012

Pumpkin Patch is the latest retailer to go into administration. The administrators have said that they will continue to trade the relevant stores whilst they look for a buyer.

If a company in administration retains premises for the benefit of creditors, the administrator must treat the rent that falls due under the lease during the period as a necessary disbursement and therefore it will rank as an 'expense', which is higher up the chain of priority than an unsecured debt.

Whilst this might sound like some welcome news for landlords, unfortunately it is only rent that falls due during occupation. If the Pumpkin Patch leases have rent payable on the usual quarter days then the next payment will not fall due until 25 March and by this time the landlord may well find that the administrators are no longer in occupation.

Monthly rents are usually seen as a benefit to tenants but in this scenario the landlord could benefit as well.

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