Britain’s retailers who have entered into administration in the past could be liable for unpaid rent in the millions of pounds if a consortium of landlords win their case at the Court of Appeal.

A consortium of landlords, including Land Securities and British Land, are challenging computer game retailer Game over quarterly rent (£3m) that was due just before Game went into administration as the landlords believe that retailers are appointing administrators immediately after rent is due.

Charles Maunder, partner and head of the banking, restructuring and insolvency team at law firm Michelmores, said: “Certainty is often elusive for creditors in 2014’s turbulent retail market. But now that the long-running battle over Game’s disputed rent has finally reached the Court of Appeal, there is a real opportunity for the courts to provide welcome clarity for landlords and administrators.  

“But with increased certainty may also come disruption. Companies in administration could witness a wave of retrospective claims for rent due to be paid from previous ‘rent-free’ periods that have taken place in recent years.

“Now that Game is preparing to float on the London Stock Exchange after a period of prolonged post-restructuring success, the implications of this case may also make future rescues of stricken retailers more difficult to achieve.”

As the law stands currently any rent that is outstanding when the retailer goes into administration is classed as debt, and so will not be payable to the landlord and in this case Game enjoyed three months of rent-free trading due to appointing an administrator the day after a quarters rent was due.

If the landlords are successful the law would be implemented retrospectively and so would affect multiple retailers.