Catching Up With Online Business

According to a Joint Administrator of PwC, Mike Jervis, the statements made by representatives of PricewaterhouseCoopers and Songbird Estates/Canary Wharf are suggestive of the fact that it won’t be long before the row between the two companies will reach the High Court despite the attempts at reconciliation.

The bone of contention in this case is a rental site situated in 25-30 Bank Street that was the subject matter of a contract between the Lehman Brothers and Songbird Estates, the landlord at Canary Wharf. The site was rented out to Lehman Brothers for a period up till 2033 for a yearly rental of £37m. However, after Lehman collapsed in 2008, the rent was shared between PwC as their administrator and other tenants on sublease like Namura bank etc.

The problem arose when PwC contended that they were not obliged to pay for rent desk rates for half the rent as they used to as they occupied only one-third of the building spread in 1,000,000 total square footage. This has resulted in a huge arrear of over £2.6m since January this year, especially since PwC is shifting its offices as well.

To create further complications for the Estates, the other renter Namura Bank is also unwilling to renew the lease, which would expire in a year. This would means that the building will be half vacated soon with other vacancies queuing up.

Though Canary Wharf is trying to negotiate with a number of financial services to counter its income deficit and has a substantial coverage of £224m from AIG to cover cases of breached contrasts, the option seems to be more far fetched than dragging the company to court.