In Crystal Palace FC Ltd v Kavanagh & Ors [2013] EWCA Civ 1410, the Court of Appeal considered whether dismissals made by an administrator to keep a business alive with the ultimate aim of selling it were automatically unfair under TUPE, in which case liability would pass to the buyer.
Comment
It is a fact of life that whatever goes up will normally come back down (but not necessarily vice versa). Nowhere is this more keenly felt than in the world of British football, where those clubs that just about stay in the Premier League reap riches that would be the envy of Plutus, Ancient Greek god of wealth, and those that drop out face a desperate chase for money simply to stay afloat.
English schemes of arrangement (Schemes) have become a useful and established procedure for restructuring the debts of foreign companies incurred under English law finance documents. For an overview of why they are useful and how they work, see our July 2011 article "Financial restructurings of foreign companies through English schemes of arrangement".
Whenever there is an apparent monetary debt, common practice is for a claimant to threaten a winding up petition as part of the tactics to get a potential defendant to pay up. Three weeks after a statutory demand letter is sent where an apparent debt for £750 or more exists, a winding up petition can be issued against a company which has not paid (the actual financial wellbeing of the payer is irrelevant as long as they have not paid). Whenever an apparent debt is in dispute this can be a powerful tool to unsettle a defendant.
The context - validity of appointment of administrators
The appointment of administrators under a charge prevents a company’s directors from exercising any management powers without the administrator’s consent.
However, the charge must be enforceable at the time of the administrators’ appointment. What happens if the directors dispute that the charge was enforceable? Are they prevented from controlling the company to reject the appointment.
The background
The Court of Appeal’s ruling in Neumans LLP v Andrew Andronikou & Ors [2013] EWCA Civ 916 has provided some useful guidance to insolvency practitioners on the courts’ approach to administration and liquidation expenses.
Pre-match warm up
On 17 September, TPR updated its trustee toolkit to include a new learning module: ‘Winding up a DB scheme, insolvent employer: wind-up or transfer to PPF’. The module, now available to download, covers DB scheme closures where the employer is insolvent.
An updated Statement of Insolvency Practice (SIP) relating to pre-packaged sales in administrations has been issued by the Joint Insolvency Committee, effective from 1 November 2013. The new SIP aims to provide greater clarity for creditors, with insolvency practitioners (IPs) having to provide earlier notification of the pre-packaged sale and more detail as to the circumstances surrounding, and terms of, the sale transaction.
On 24 July 2013, the Supreme Court handed down its long-awaited judgment in the Nortel/Lehman case on where a contribution notice (CN) or financial support direction (FSD) issued by the Pensions Regulator (TPR) on a company that is already in insolvency proceedings (eg administration) ranks in the order of priority of payment.