The EAT has ruled that administrations are never to be viewed as "instituted with a view to liquidation", even if it is immediately clear to the administrator on appointment that there is no real prospect of rescuing the company as a going concern. This departs from the earlier EAT decision in Oakland v Wellswood and tribunals are likely to follow this latest decision.
The legal character of an administration is primarily to rescue the company and as such it cannot benefit from TUPE Regulation 8(7) (which disapplies the automatic transfer of employees to liquidation proceedings). Employees will therefore be automatically transferred to a purchaser of a business from an administrator, including pre-packs. This will need to be factored into the commercial assessment of the deal and in particular the price, given that administrators will rarely give adequate indemnities for employment claims. (OTG v Barke, EAT)
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Steve Bell
Managing Partner - Employment, Industrial Relations and Safety (Australia, Asia), Melbourne
Emma Rohsler
Regional Head of Practice (EMEA) - Employment Pensions and Incentives, Paris
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