Last week the Employment Appeal Tribunal ruled in five conjoined appeals that TUPE applies in all administrations, since they constitute "relevant insolvency proceedings" and not "liquidation proceedings". This will be the case even in “pre-pack” administrations, where a business is placed into administration but immediately sold to a purchaser who has been lined up to buy the business beforehand.

In this case, a liquidator had commenced proceedings against the former director of a company in relation to transactions which were alleged to have been made at an undervalue and/or with an intention to defraud creditors and/or which were preferential. It was also alleged that the former director had acted in breach of his fiduciary duties in procuring or permitting the transactions to take place.

The Employment Appeal Tribunal (EAT) held in OTG Ltd v Barke (2011 UKEAT) that TUPE will apply to transfer employees when a company goes into administration, including on a pre-pack administration. This decision overturns the leading case of Oakland v Wellswood (Yorkshire) Ltd, which found that TUPE did not apply to "pre-packs".

Lehman Brothers Special Financing Inc.’s pending appeal against the judgments of the UK High Court and the Court of Appeal in the so called “flip clause cases”, concerning the enforceability of flip clauses, is scheduled to be begin with Belmont Park Investments Pty Limited (Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc (UKSC 2009/0222)) on March 1, 2011.

There has been an upturn in the frequency of trade finance workouts, restructurings and formal insolvencies. Susan Moore and Luci Mitchell-Fry look at some key issues that banks face when trade finance lending passes to "bad bank".

The bank's decisions at every stage of a trade finance transaction are critical: at origination; when following a workout/restructuring; and once a formal insolvency process becomes a reality.

Origination

The EAT's judgment

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.

A recent Supreme Court judgement has confirmed that where an individual, Mr X, acts as director of company A, and company A is the sole director of company B, that will not necessarily make Mr X a “de facto” director of company B.

The Court decided that the mere fact of acting as a director of a corporate director was not enough to render the individual a de-facto director, “something more” would be required, such as the director holding himself out in correspondence as a director of company B.

OTG v Barke1 is the most recent judgement by the employment appeal tribunal (EAT) on whether the Transfer of Undertakings (Protection of Employment)  Regulations 2006 (known as 'TUPE') apply to sales by companies in administration under schedule B1 to the Insolvency Act 1986.

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.