Employment law and insolvency law can sometimes have a strained relationship, particularly when laws safeguarding employee rights find themselves in conflict with an insolvency practitioner’s duty to act in the interests of all the creditors (as opposed to any one group). But the case of Palmer vs Northern Derbyshire Magistrates’ Court should be heeded by insolvency practitioners since it confirms they can be criminally liable for not notifying the secretary of state about proposed redundancies.
This blog considers Palmer, why the court reached the conclusions it did and its implications for insolvency practitioners particularly in situations where there is insufficient time between appointment and making redundancies to give the required notice.
Mr Forsey was the sole director of USC, a company ultimately owned by Sports Direct. A notice of intention to appoint was filed on 6 January 2015. Between then and 11 January 2015, USC removed fixtures, fittings and equipment from a warehouse it operated in Dundonald.
On 13 January administrators were appointed. Mr Palmer’s remit as joint administrator included dealing with the employees. The business and assets were sold to another company in the Sports Direct group whom Mr Forsey was a director on the day of appointment, but which excluded the business and operations of the Dundonald warehouse. On 14 January, employees at the Dundonald warehouse were given notices of the proposed redundancies. Just minutes later they...
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