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?

On 20 May 2022 Mr Justice Adam Johnson handed down his judgment in the matter of Swiss Cottage Properties Limited (in liquidation) [2022] EWHC 1495 (Ch).  Deloitte, represented by Derrick Dale QC and Ben Griffiths as instructed by DAC Beachcroft LLP, successfully defended a claim for negligence. A copy of the judgment is available here.  

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 Financial Conduct Authority, the Information Commissioner’s Office and the Financial Services Compensation Scheme have issued a joint statement warning insolvency practitioners to be careful when handling personal data.

The Joint Statement says that the FCA, ICO and FSCS are aware that some IPs and FCA - authorised firms have attempted to sell clients’ personal data to claims management companies, where it is likely claims for compensation will be made to the FSCS.