This is the second litigation involving the furlough scheme in the insolvency context, following on from Re Carluccio's (in administration). Please refer to our note on Carluccio's for background reading on how the furlough scheme weaves into insolvency law.

Issue

In the first litigation involving the Furlough scheme, the court in Re Carluccio's (in administration) ruled on how the administrators can lawfully give effect to furlough arrangements with the employees who have agreed to the variation of their employment contract.

Read on for our analysis of the case which gives an interesting insight into how the courts in the future might interpret the furlough scheme.

1. Background

Carluccio’s in administration

Garcia v Marex Financial Ltd [2018] EWCA Civ 1468

The Court of Appeal has for the first time applied the rule against reflective loss to claims by creditors. The rule had in the past only been used to prevent claims by shareholders against directors, where the losses claimed by the shareholders reflected those suffered by the company.

The potential cost of making or defending a claim is often a concern for anyone involved in litigation or arbitration. AG has since 2008 been at the forefront of sharing the risk with its clients, and the litigation funding market has responded with a variety of different options and opportunities. And it's also a developing topic for the courts. Our Control Update newsletter reports all the latest developments, both commercial and legal.

Litigation funders – extent of their involvement and liability for costs