Where a company goes into administration and the administrators sell on part or all of the business the question arises whether accrued employee liabilities will pass over to the buyer, who may inherit an unexpected list of old debts.

Regulation 8(7) of TUPE 2006 attempted to mitigate the effect of TUPE in the case of certain insolvencies. Mirroring the wording in the Acquired Rights Directive, it provides that contracts of assigned employees (with their accrued liabilities) will not pass to the buyer where the transferor  

In another case involving administrators, an employment tribunal somewhat controversially has held that the individual administrators could be liable as principals in an agency relationship with employees of a company in administration.

Toward the end of 2009 the Republic of Ireland’s then government passed legislation which would lead to the creation of the National Assets Management Agency (NAMA). The role of NAMA was a simple one: to remove toxic debt from the books of the Irish banks to assist in attempts to revive the national economy. The security would be acquired at a discount and purchased with Government backed bonds. In the first phase of NAMA (focusing on mortgages and other secured facilities with a minimum value of £20m) over £80bn in toxic debts were acquired.

A CVA was introduced as one of the rescue arrangements under the Insolvency Act 1986. It allows a company to settle unsecured debts by paying only a proportion of the amount owed, or to vary the terms on which it pays its unsecured creditors. Whilst a CVA only requires approval of a 75% majority of the creditors by value, it binds every unsecured creditor of the company, including any that voted against it or did not vote at all.

In Rubin v Coote [2011] EWCA Civ 106 (09 February 2011) the Court of Appeal has upheld the decision of a liquidator to settle litigation against a former director of a company notwithstanding the opposition of the company’s creditors.

It is an age old problem for creditors who are faced with debtors who ask for more time to pay their debts. The Civil Procedural Rules (CPR) 14.9 and 14.10 allow for a debtor, following the admission of their debt, to request time to pay. It is open for a claimant to choose whether or not to accept a defendant’s proposals; if the claimant does not accept the defendant’s proposals, it is for the court to determine the time and rate of payment. The court’s discretion conferred by CPR 14.10 to extend time for payment has not, until now, been examined.

On March 15th, the FDIC published for comment a proposed rule that would establish the priority of payments to creditors when the FDIC acts as liquidator for a failed non-bank financial institution. The proposal also would establish the procedures for filing a claim with the receiver and clarifies the receiver's clawback authority. Comments should be submitted within 60 days after publication in the Federal Register, which is expected during the week of March 21.

FDIC Proposes Rules for the Recoupment of Compensation from Executives of Failed Financial Institutions I hope this does not apply to any of you, but on Tuesday, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a Notice of Proposed Rulemaking (NPR) to clarify application of the orderly liquidation authority contained in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Orderly Liquidation Authority" (OLA).

In what circumstances might an individual administrator be liable for discrimination against employees of companies in administration? This was the question the Employment Tribunal asked itself in the case of Spencer v Lehman Brothers (in administration) and others.

Corporate Debt Restructuring through a Company Voluntary Agreement

In the current economic climate most businesses will experience temporary or longer term cash flow pressure resulting in stressful trading and creditor pressure.