When an employer is insolvent and administrators appointed, job losses are often an inevitable consequence. In this blog we look at the legal obligations arising where redundancies meet the threshold for collective consultation, and the implications for administrators arising out of the recent Supreme Court in the case of R (on the application of Palmer) v Northern Derbyshire Magistrates Court and another.

When does the legal obligation to collectively consult apply?

Changtel Solutions UK Ltd (In Liquidation) and others v G4S Secure Solutions (UK) Ltd [2022] EWHC 694 (Ch)¹

Section 127(1) Insolvency Act 1986 (“IA 1986”) provides that: "In a winding-up by the court, any disposition of the company’s property, and any transfer of shares, or alteration in the status of the company’s members, made after the commencement of the winding-up is, unless the court otherwise orders, void."

On 9 September 2021, the UK Government announced that the current restrictions on the use of statutory demands and the presentation of winding up petitions (as introduced by Schedule 10 of Corporate Insolvency and Governance Act 2020 (“CIGA”) and set to expire on 30 September 2021) will be amended by the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10 Regulations 2021) (the “Regulations”) and replaced with more limited restrictions (discussed below) until 31 March 2022.

On 24 February, the Government published draft regulations that, if implemented, will impose new restrictions on pre-pack administration sales to connected parties. For all `substantial disposals' (which will include `pre-pack' sales) to connected parties, taking place within eight weeks of the administrators' appointment, the administrators will either need creditor consent or a report from an independent `evaluator'.

Context

The Corporate Insolvency and Governance Act 2020 came into force on 26 June 2020 introducing a number of temporary and more permanent reforms, summarised in my colleague Jess’ post here.

Since Richard Branson’s Virgin Atlantic Airways Ltd’s request for Government loan was denied (see the post by my colleague, Jess), the airline has announced plans for a private-only solvent recapitalisation to "rebuild its balance sheet" and "welcome passengers back".

Background: Financial Backdrop

The Stats

When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.

Masuda, Funai, Eifert & Mitchell routinely represents creditors in bankruptcy proceedings in order to protect their contractual and legal interests and rights to payment. The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.

AUTOMOTIVE

The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.  

DINING  

Giordano’s Enterprises Inc. filed for Chapter 11 bankruptcy along with 32 of its affiliates.  

Garden Operations Realty LP, the parent of New York bagel manufacturer H&H Bagels, has filed for Chapter 11 protection.