It’s been a difficult last few years for the licensed trade and the hospitality and leisure sector generally, both in terms of recovery from the Covid-19 pandemic and, more recently, the wider economic challenges facing the industry.

The threat of insolvency looms large and with it comes various regulatory considerations for insolvency practitioners (IPs): firstly, liquor licensing considerations that might arise post-appointment and, secondly, broader health and safety issues that can shift into sharp focus.

Premises licences

The Employment Appeal Tribunal has recently made some significant decisions which have increased the value of payments to be made to employees, including in insolvency situations. Below, we highlight the key facts you need to know.

(1) Additional elements to be included when calculating holiday pay

Tata Steel Limited (Tata) has been intending to end their British operations for some time. As yet, it has been unable to do so as its subsidiary, Tata Steel UK (TSUK), is the principal employer of one of the UK’s largest defined benefit (DB) schemes. The obligations and liabilities under the British Steel Pension Scheme (BSPS) have been deemed by prospective buyers as too great to take on with the Scheme currently running at a deficit of approximately £700 million.

The decision of the Inner House of the Court of Session was released last week in the keenly awaited application by the liquidators of Scottish Coal who sought directions on whether a liquidator appointed to a Scottish company could:

Overturning the High Court and Court of Appeal decisions in Bloom and Others v The Pensions Regulator and Others, the Supreme Court has ruled that financial support directions (FSD)and contribution notices (CN) issued by The Pensions Regulator in insolvencies create “provable debts” which should be given unsecured, non-preferential, creditor ranking.

We recently reported on the Court of Session's decision that a liquidator of a company being wound up in Scotland may abandon both heritable property and statutory licences. A full copy of that article can be accessed here.

The Court has now issued its written decision. This provides further analysis and confirms the position that we previously reported.

Parties represented

The Court of Session has held that a liquidator of a company being wound up in Scotland may abandon both heritable property and statutory licences. Affected creditors will have the right to submit a claim in the liquidation process. In the absence of that creditor holding security, the claim will rank as an unsecured claim.

Background

Eastman Kodak is in the process of emerging from Chapter 11 bankruptcy in the United States. A key part of the process has been the settlement of the $2.8 billion claim by Eastman Kodak’s UK subsidiary pension fund, the Kodak Pension Plan. This has involved the sale of 2 businesses to the Kodak Pension Plan for a total of $325 million in return for a discharge from liability to the Plan. These businesses were valued at $650 million.

In this August edition of the Pensions E-Bulletin, we look at the Pensions Regulator’s statement on its approach to financial support directions (FSDs) in insolvency situations, the shortened guidance on incentive exercises issued by Pensions Regulator following the publication of the industry code of good practice as well as noting the updated guidance on multi-employer scheme departures and the consultation by the Takeover Panel on proposals relating to pension scheme trustees. 

FSDs and insolvency – the Regulator’s statement

The Court of Appeal has issued further guidance on the thorny issue of the application of the TUPE Regulations to administration proceedings.  While many practitioners will feel that the decisions are not helpful in trying to achieve business sales in what is already a challenging market, insolvency practitioners (IPs) nonetheless need to be aware of the clarity that these cases have brought. The key points to note are: