The government has taken the long-awaited move to protect companies in administration from paying business rates on unoccupied properties.

The decision reverses the effect of the Trident ruling, where the courts found that council business rates should be treated as a preferential creditors in an administration.

Insolvency experts had warned that Trident had put back insolvency rules by 20 years and would cause many retailers to collapse.

'We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible,' said local government minister John Healey.

'A permanent exemption will remove any potential for decisions about whether to enter administration to be distorted by differences in rates liability.'

President of R3 Patricia Godfrey said the decision could not have come at a better time for retailers: 'With the effects of the credit crunch increasingly likely to be felt in the new year, this move will help administrators save business and jobs.'

Further reading:

Government to step in to save retailers

Insolvency rules lead to retail collapse fears