GAME is being taken to the Court of Appeal by a number of the country’s largest property companies.
The Telegraph reports that a consortium of landlords including Land Securities, Hammerson and British Land are making claims on missed rent payments incurred around the time of GAME’s descent into administration in 2012.
They claim that GAME effectively operated rent-free for the first three months after its resurrection – a loophole that exists because companies that go into administration just before their quarterly rent pill escape the payments.
The retailer filed for administration the day after its rent was due.
GAME, however, will argue that existing laws should be upheld.
Worryingly for GAME, observers are labelling the hearing as a test case” that could influence future administration law, increasing the chances that the retailer could find itself being made an example of.
After the controversial collapse of OpCapita’s Comet, government has come under increasing pressure to tighten the laws surrounding administration and to close the loopholes that allow businesses to escape payments to creditors – and sometimes subsequently resurrect themselves.
The paper speculates that the case could have affect GAME’s proposed flotation as if the consortium prevails GAME and its backers will have to pay out roughly ten per cent of its current annual rent and service charge bill”.