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 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

Simona Kornhaas v Thomas Dithmar (Case C-594/14)

The ECJ have ruled that a director of an English company that had entered into insolvency proceedings in Germany is liable to reimburse the company under German law for payments made after the company became insolvent.

Edgeworth Capital Luxembourg Sarl (2) Aabar Block Sarl V Glenn Maud [2015] EWHC 3464 (Comm)

The High Court in England has ruled on whether Spanish Law has the effect of extinguishing third party guarantees when the beneficiary of the guaranteed liabilities enters into insolvency proceedings in Spain.

This article was first published by The Gazette and the full article can be found online here. 

In our June seminars we discussed the Pre-Pack Pool and the proposed changes to SIP 16. The revision was recommended by Teresa Graham as part of her independent review into pre-packs in June 2014, and the new SIP 16 was introduced on 2 November 2015 to coincide with the launch of the Pre-Pack Pool.

Key provisions of the revised SIP 16, which remains virtually unchanged from the draft issued in January this year, include: