Administration helps staff

How administration helped staff secure redundancy money after asset-strippers ran off without paying the wages.

The situation

When a long-established printer got into financial difficulty the bank called in the Administrators. Within a few days, the Administrators had sold the business to new investors. Under Transfer of Undertakings (Protection of Employment) "TUPE" regulations, the 25 employees automatically moved to the new employer, who promised to pay them their arrears. However, within a couple of weeks, the new owners had disappeared owing even more wages.

What we did

Malcolm Fillmore of Atherton Bailey's Crawley Office arranged for the employees to come in for pro bono advice. In a crowded room, Malcolm listened to their story and began to evolve a plan.

The employees could not claim under the government redundancy scheme because the recent transfer made redundancy payments the new owners' liability. The redundancy fund only pays where the employer is in formal insolvency and since the company had been abandoned and had no assets, the employees were powerless.

Malcolm recommended the employees make a creditors' application to the Court for an administration order. This would be far quicker and more certain than petitioning the Court for a compulsory liquidation. A whip-round of £150 each funded the application.

The result

The High Court Judge quickly granted the order and the employees successfully claimed for their redundancy payments from the government fund.

After the employees' case was settled, Malcolm investigated the full circumstances of the business collapse. A very murky picture emerged. The leading figure behind the purchase from the Administrators was an undischarged bankrupt who used several names. He had tricked other people into signing the purchase documents (where evidence of identity would be needed) and the down payment was made by refinancing equipment, even before it was bought. Wherever Malcolm looked, he found false documents, including brand new cars leased in the company name after it had ceased trading.