The court has a limited discretion not to make a bankruptcy order where the debt is the subject of a statutory demand which has not been paid and is outstanding at the time of the bankruptcy petition hearing.

With effect from 6 April 2011, the London Insolvency District (General London County Court) Order 2011 gives the Central London County Court jurisdiction over bankruptcy cases where the bankrupt resides, or carries on business, in the London insolvency district. The High Court used to have jurisdiction over all London's bankruptcy cases.

The EAT has held that employees of a business will transfer to the buyer of that business, even where the business is in administration, as long as there has been a 'relevant transfer'.

This was conclusion of the Court in the case of Nicola Jane Haworth v Donna Cartmel and Revenue & Customs Commissioners. The case was an application by Ms Haworth to annul or rescind a bankruptcy order on the grounds that she lacked capacity when a statutory demand and bankruptcy petition were served on her personally.

In circumstances where a debtor lacks mental capacity to deal with a statutory demand and subsequent bankruptcy petition, the court will rescind or annul a bankruptcy order.

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  

BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL Plc & others [2011] EWCA Civ 227

The Court of Appeal has allowed companies around the country to breathe a solvent sigh of relief, as it has held that the so-called “balance sheet” test of insolvency in s123(2) Insolvency Act 1996 is intended to apply where a company has reached a “point of no return” rather than being used as a “mechanistic, even artificial, reason for permitting a creditor to present a petition to wind up a company”.  

In a decision that departs from an earlier Employment Appeal Tribunal (EAT) ruling, the EAT has ruled in OTG Ltd v Barke and others that normal TUPE principles always apply to administrations, including pre-pack administrations, because an administration does not constitute “bankruptcy proceedings or any analogous insolvency proceedings…instituted with a view to liquidation of the assets of the transferor”. This means that employees do automatically transfer to the buyer in an administration situation and thus are protected against unfair dismissal.

The EAT's judgment

Since the Transfer of Undertakings (Protection of Employment) Regulations 2006 were made in order to implement the European Union’s Council Directive 80/987/EEC, there has been an ongoing debate on how regulation 8 (7) (the bankruptcy proceedings exception) should be interpreted. Fortunately, a recent decision by the Employment Appeals Tribunal has gone some way towards clarifying the issue.