Today (20th December) the Court of Appeal has clarified how TUPE applies when a business is sold after administration proceedings are instituted. It has decided that employees transfer to the new owner of the business, and are protected from transfer-related dismissals, thereby putting to rest more than two years of legal uncertainty following conflicting decisions from the Employment Appeal Tribunal (EAT).

It’s been quite a week for important cases on TUPE and its operation in relation to administrations. The Court of Appeal has delivered two judgments which are of considerable importance for those contemplating and structuring transactions out of administration.

The key points to note are that:

On 16 December 2011 the special administrators of MF Global UK Limited ("MFG UK") published their proposals for achieving the purpose of the special administration.

Purpose of the proposals

The special administration of MFG has three statutory objectives:

The First-tier Tribunal has issued its decision in the case ofM Gilbert (t/a United Foods) v HMRC, one of the first cases concerning a claim for entrepreneurs' relief to reach the First-tier Tribunal. The Tribunal was asked to decide whether a taxpayer had disposed of part of his business or, as HMRC argued, simply sold some of the assets used to carry on the business.

A common fact in any transaction, is the effect of human relations, daily life and commercial realities. The legal do's and don'ts are often overtaken by practicalities. An example is a need for a tenant to enter into occupation of premises.

The recent case of Mann Aviation Group (Engineering) Ltd (in Administration) v Longmint Aviation Limited Ltd dealt with the rights of an occupier going into possession of premises and paying rent, but without any form of written lease or licence.

Kookmin Bank v Rainy Sky SA & Others

[2011] UKSC 50

We covered this case back in Issue 120. The case has now reached the Supreme Court where the decision of the Court of Appeal was overturned. In doing so, Lord Clarke adopted the interpretation of the bond which was most consistent with business common sense.

Summary and implications

This note provides a short summary of receivership and covers some of the most frequently asked questions. The note is intended to be a general overview and specific advice should be taken in individual cases.

The appointment of a receiver is one of the formal enforcement options typically available to lenders who have security over property assets situated in England and Wales. The receiver’s job is to realise those assets and use the proceeds to discharge the debt due to the charge-holder.

Limited liability is not complete protection for directors and they must carefully consider their actions and, indeed, failures to act in order to avoid “piercing the corporate veil”.  Directors may be ordered to contribute to the assets of the company even where they have not acted dishonestly.

An English rugby club (an unincorporated association of its members) engaged the services of Barnes Webster & Sons (BWS), a construction company. The club’s treasurer signed the contract, which was witnessed by Davies, the club’s president. The club agreed to pay BWS a fixed price plus additional amounts for certain variations in the work, should they arise. The variations were required, but the club did not pay the £147,000 bill for them that BWS presented. BWS made a demand on Davies personally, which he moved to set aside.

On October 31, 2011 (the “Petition Date”), MF Global, which up to that point had been one of the world’s largest broker/dealer firms, was plunged into insolvency on both sides of the pond. On the Petition Date, MF Global Holdings, Ltd. and MF Global Finance USA, Inc. (the “US Debtors”) each filed voluntary bankruptcy petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. Contemporaneously with the U.S. bankruptcy filings, the Securities Investor Protection Corporation initiated the liquidation of MF Global, Inc., the U.S.