In a judgment that will be welcomed by insolvency professionals, the Supreme Court has today confirmed that administrators cannot be personally criminally liable for failing to notify the Secretary of State about plans for collective redundancies. This judgment follows an appeal by Robert Palmer against a finding that he was criminally liable for his failure to submit form HR1 in his capacity as the joint administrator of West Coast Capital (USC) Limited (USC).
What is the obligation?
One of the first questions we are often asked by buyers in distressed M&A situations is what is the likely quantum of employee liabilities? It is not uncommon for buyers to want to restructure the workforce post-completion and early engagement on this issue is key.
Transaction structure and its impact on employment
The Key Provisions
After much delay, the Third Parties (Rights Against Insurers) Act 2010 (the “Act”) will come into force on 1 August 2016. The essential purpose of the act is to aid claimants in procuring recoveries from the insurers of insolvent defendants.The Key Provisions
This will be of particular use to businesses that frequently find themselves in litigation with financially weak defendants. However, insolvency practitioners should also take note of the Act as it places new obligations on them.
The Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act) will finally come into force from 1 August 2016.
The Act improves the rights of claimants who have a claim against an insolvent company or individual to directly claim against the insolvent party’s insurer.
In particular, the 2010 Act brings about the following important changes:
Heads of Terms’ or ‘Memoranda of Agreement’ (“MoA”) are commonly agreed by parties as a precursor to entering into more substantial agreements.
MoA are often intended by the parties to be broad statement of commercial intent to enter into a contract, rather than having contractual force themselves. Accordingly, MoA are often drafted with a more relaxed attitude towards their contents
However, no matter what the parties may have intended, a MoA can easily amount to a contract depending on its drafting, exposing the parties to unintended liabilities.