In the current recession, with more businesses facing financial difficulties and the prospect of insolvency, the recent case of Oakland v Wellswood (Yorkshire) Limited offers some welcome relief to both those thinking of selling a struggling business and the prospective purchaser of such a business.
The case decided that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) will not normally apply to the sale of a business through ‘pre-pack’ administration. This means that, when buying a business that is in administration, the purchaser is unlikely to be subject to the obligations that the TUPE Regulations normally impose in relation to employees and this will be an important consideration for a prospective purchaser. In addition, the seller of a struggling business may find it easier to find a buyer.