ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Mr Justice Underhill, Mr I. Ezekiel and Mr P. Smith
Appeal No: UKEAT/0444/09/RN
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIMER
MR JUSTICE WARREN
| KEY2LAW (SURREY) LLP
|- and -
|- and -
|SECRETARY OF STATE FOR BUSINESS, INNOVATION AND SKILLS
Mr Keith Bryant (instructed by pdt solicitors) for the Respondent
Written submissions from Mr Ashley Serr on behalf of the Secretary of State for Business, Innovation and Skills
Hearing date: 17 October 2011
Crown Copyright ©
Lord Justice Rimer :
'Regulations 4 and 7 do not apply to any relevant transfer where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner.'
(i) The Directives
'… must lead to an improvement in the living and working conditions of workers in the European Community. The improvement must cover, where necessary, the development of certain aspects of employment regulations such as procedures for collective redundancies and those regarding bankruptcies. ….'
'Whereas the purpose of this Directive is to amend Directive 77/187/EEC in the light of the impact of the internal market, the legislative tendencies of the Member States with regard to the rescue of undertakings in economic difficulties, the case-law of the Court of Justice …, Council Directive 75/129/EEC … on the approximation of the laws of the Member States relating to collective redundancies and the legislation already in force in most Member States;'
'Whereas, with a view to ensuring the survival of insolvent undertakings, Member States should be expressly allowed not to apply Articles 3 and 4 of Directive 77/187/EEC to transfers effected in the framework of liquidation proceedings, and certain derogations from that Directive's general provisions should be permitted in the case of transfers effected in the context of insolvency proceedings.'
'The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee. …
The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes to the workforce. …
'1. Unless Member States provide otherwise, Articles 3 and 4 shall not apply to any transfer of an undertaking, business or part of an undertaking or business where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practitioner authorised by a competent public authority).
2. Where Articles 3 and 4 apply to a transfer during insolvency proceedings which have been opened in relation to a transferor (whether or not those proceedings have been instituted with a view to the liquidation of the assets of the transferor) and provided that such proceedings are under the supervision of a competent public authority (which may be an insolvency practitioner determined by national law) a Member State may provide that:
(a) notwithstanding Article 3(1), the transferor's debts arising from any contracts of employment or employment relationships and payable before the transfer or before the opening of the insolvency proceedings shall not be transferred to the transferee, provided that such proceedings give rise, under the law of that Member State, to protection at least equivalent to that provided for in situations covered by Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer, and, or alternatively, that,
(b) the transferee, transferor or person or persons exercising the transferor's functions, on the one hand, and the representatives of the employees on the other hand may agree alterations, in so far as current law or practice permits, to the employees' terms and conditions of employment designed to safeguard employment, opportunities by ensuring the survival of the undertaking, business or part of the undertaking or business. …'
'(1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2) Without prejudice to paragraph (1), but subject to paragraph (6), and regulations 8 and 15(9), on the completion of a relevant transfer –
(a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee; and
(b) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees shall be deemed to have been an act or omission of or in relation to the transferee.
(3) Any reference in paragraph (1) to a person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to a relevant transfer, is a reference to a person so employed immediately before the transfer, or who would have been so employed if he had not been dismissed in the circumstances described in regulation 7(1), including, where the transfer is effected by a series of two or more transactions, a person so employed and assigned or who would have been so employed and assigned immediately before any of those transactions. …'
'(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part X of the 1996 Act (unfair dismissal) as unfairly dismissed if the sole or principal reason for his dismissal is –
(a) the transfer itself; or
(b) a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce …'.
'(1) If at the time of a relevant transfer the transferor is subject to relevant insolvency proceedings paragraphs (2) to (6) apply.
(2) In this regulation "relevant employee" means an employee of the transferor –
(a) whose contract of employment transfers to the transferee by virtue of the operation of these Regulations; or
(b) whose employment with the transferor is terminated before the time of the relevant transfer in the circumstances described in regulation 7(1).
(3) The relevant statutory scheme specified in paragraph 4(b) (including that sub-paragraph as applied by paragraph 5 of Schedule 1) shall apply in the case of a relevant employee irrespective of the fact that the qualifying requirement that the employee's employment has been terminated is not met and for those purposes the date of the transfer shall be treated as the date of the termination and the transferor shall be treated as the employer.
(4) In this regulation the "relevant statutory schemes" are –
(a) Chapter VI of Part XI of the 1996 Act;
(b) Part XII of the 1996 Act.
(5) Regulation 4 shall not operate to transfer liability for the sums payable to the relevant employee under the statutory schemes.
(6) In this regulation "relevant insolvency proceedings" means insolvency proceedings which have been opened in relation to the transferor not with a view to the liquidation of the assets of the transferor and which are under the supervision of an insolvency practitioner.
(7) Regulations 4 and 7 do not apply to any relevant transfer where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner.' (Emphasis supplied)
The emphasised language of regulation 8(7) is, with minor immaterial omissions, drawn verbatim from article 5.1 of the 2001 Directive.
'13. The scheme of the 2006 Regulations is broadly this. Typically, where there is a transfer of an undertaking, regulation 4 provides that the employees are automatically transferred to the transferee with the latter taking over all the liabilities of the transferor.
14. Regulation 7 provides that any dismissal will be automatically unfair unless it is for an economic, technical or organisational reason connected with the transfer. However, it is recognised that to apply these principles to insolvent businesses would discourage potential purchasers of the business from acquiring the business. That would be to the detriment of the employees.
15. Regulation 8 therefore aims to relieve transferees of the burdens which would otherwise apply in certain defined circumstances.
16. Essentially this is done in two quite distinct ways. The most extensive exception from the effect of the Regulations is created by regulation 8(7) (which is intended to reflect the provisions of article 5(1) of Directive 2001/23). This provides that where the insolvency proceedings are analogous to bankruptcy proceedings and have been instituted with a view to liquidation of the assets, then neither regulation 4 nor 7 applies at all. There is no transfer of staff to the transferee and no claim for unfair dismissal against him (although other provisions of the Regulations, such as the information and consultation regulations, continue to operate).
17. A narrower exception is carved out where regulation 8(6) applies. This applies to insolvency proceedings where the purpose is not with a view to liquidation of assets. This does not altogether exclude, but it does modify, the effects of regulations 4 and 7. It means that the transferee does not pick up all of the liabilities which would otherwise transfer to him.
18. Regulation 8(3) has the effect of making the Secretary of State liable for all the obligations still outstanding at the date of the transfer which are caught by Part XII of the 1996 Act [the Employment Rights Act 1996]. There is a deemed dismissal at that stage for purposes of fixing those liabilities even though there has been no actual dismissal. However, to the extent that the liabilities exceed the statutory limits, liability transfers to the transferee.
19. Regulation 8(5) has the effect of making the insolvency fund rather than the transferee liable to meet any redundancy liabilities. (These will typically arise where there are dismissals for redundancy which are not for economic, technical or organisational reasons. The issue does not arise here.)'
'9. Variations of contract where transferors are subject to relevant statutory proceedings
If at the time of a relevant transfer the transferor is subject to relevant insolvency proceedings these Regulations shall not prevent the transferor or transferee (or an insolvency practitioner) and appropriate representatives of assigned employers agreeing to permitted variations…'.
(iii) Administration under Schedule B1 of the Insolvency Act 1986
'The purposes for whose achievement an administration order may be made are –
(a) the survival of the company, and the whole or any part of its undertaking, as a going concern;
(b) the approval of a voluntary arrangement under Part I [of the Insolvency Act 1986];
(c) the sanctioning under section 425 of the Companies Act  of a compromise or arrangement between the company and any such persons as are mentioned in that section; and
(d) a more advantageous realisation of the company's assets than would be effected on a winding up;
and the order shall specify the purpose or purposes for which it is made.'
'3. (1) The administrator of a company must perform his functions with the objective of –
(a) rescuing the company as a going concern, or
(b) achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration), or
(c) realising property in order to make a distribution to one or more secured or preferential creditors.
(2) Subject to sub-paragraph (4), the administrator of a company must perform his functions in the interests of the company's creditors as a whole.
(3) The administrator must perform his functions with the objective specified in sub-paragraph (1)(a) unless he thinks either –
(a) that it is not reasonably practicable to achieve that objective, or
(b) that the objective specified in sub-paragraph (1)(b) would achieve a better result for the company's creditors as a whole.
(4) The administrator may perform his functions with the objective specified in sub-paragraph (1)(c) only if –
(a) he thinks that it is not reasonably practicable to achieve either of the objectives specified in sub-paragraph 1(a) and (b), and
(b) he does not unnecessarily harm the interests of the creditors of the company as a whole.
4. The administrator of a company must perform his functions as quickly and efficiently as is reasonably practicable.'
'… It is not possible to rescue the partnership as a going concern, so the objective relied on is (b), namely achieving a better result for the partnership's creditors as a whole than would be likely if the partnership were wound up without first being in administration. The applicants' case [they were the two equity partners in the firm] is that the sale of the partnership's business to the proposed purchaser for £400,000 will achieve that objective. … According to the estimated statement of affairs, total funds available for creditors on a forced sale in the event of liquidation will be only about £105,000, compared to the £400,000 proceeds of the proposed sale, and the liquidation itself would create an additional £44,000 of preferential claims by employees for arrears of pay and holiday pay'. [Emphasis supplied]
The evidence was that the sale could and would be completed immediately after the appointment of administrators and the judge made the order sought.
(iv) The administration order in respect of DK
'22. To the best of [HMRC's] knowledge information and belief the principal assets of [DK] consist of its work in progress and its ongoing retainers with its clients and the provision of legal services.
23. It is likely that if [DK] were wound up without first being in Administration this would lead to an immediate intervention by the Law Society to manage and distribute the live client files and the client account. This is likely, amongst other things, to have a serious impact upon the ability to recover [DK's] work in progress and upon the work undertaken by [DK's] clients.
24. The proposed Administrator has indicated that he believes that there may be a potential third party purchaser for the business and certain assets of [DK]. If such a sale took place this is likely to be beneficial to creditors.
25. The proposed Administrator is not currently in a position to confirm whether or not it is likely to prove possible to rescue [DK] as a going concern, although this may be the case. The Administrator will, of course, perform his functions with the primary objective of rescuing [DK] as a going concern unless it is not reasonably practicable to achieve that objective. However, by reason of the matters set out above, it is likely that the winding up of [DK] would cause a significant reduction in the potential return to the creditors of [DK], such that Administration is likely to produce a better result for [DK's] creditors as a whole than would be likely if [DK] were wound up (without first being in Administration).
26. The moratorium which would be afforded to [DK], pursuant to paragraph 43 of Schedule B1 of the Act, upon the making of an Administration Order would enable the proposed Administrator to:
26.1 take control of [DK] and its assets;
26.2 seek to protect the value of those assets for the benefit of [DK's] creditors of which [HMRC are] one;
26.3 seek to conduct an orderly sale of the business and assets of [DK] within a short timeframe so as to avoid detriment to [DK's] clients;
26.4 seek to preserve by such a sale as many jobs of [DK's] employees as possible and therefore to reduce the level of claims from employees.
27. Accordingly, [HMRC] believe that the making of an Administration Order in relation to [DK] would be the most effective way to seek to preserve [DK's] assets for the benefit of its creditors as a whole.'
(v) The decisions of the Court of Justice
'… It was during the liquidation proceedings that, pursuant to an agreement concluded by the liquidator, Thole's business was transferred with effect from 10 June 1982 to [TTP], which continued to operate the undertaking and took over most of its work-force, including Mr Abels.'
If the business was actually transferred on 10 June 1982, it would have been unnecessary to have added that it was with effect from that date. I note, however, that Underhill J, in paragraph 10(2) of his judgment for the EAT, took a different view on this, where having referred to Thole's entry into liquidation on 9 June 1982, he said that 'the following day the liquidator transferred the business as a going concern to a company called TTP'. The point perhaps has significance in the context of the consideration of the later decision of the Court of Justice in Dethier to which I shall come.
'23. It is apparent from the foregoing considerations that a serious risk of general deterioration in working and living conditions of workers, contrary to the social objectives of the Treaty, cannot be ruled out. It cannot therefore be concluded that Directive No 77/187 imposes on the Member States the obligation to extend the rules laid down therein to transfers of undertakings, businesses or parts of businesses taking place in the context of insolvency proceedings instituted with a view to the liquidation of the assets of the transferor under the supervision of the competent judicial authority.' [Emphasis supplied]
24. It must nevertheless be made clear that, even though, in view of the considerations set out above, transfers of that kind do not fall within the scope of the above-mentioned directive, the Member States are at liberty independently to apply the principles of the directive, wholly or in part, on the basis of their national law alone.
The words emphasised in paragraph 23 were the inspiration for the key language later included in article 5.1 of the 2001 Directive and regulation 8(7) of TUPE. In paragraph 23, however, the court was referring only to transfers effected by a company in insolvent liquidation.
'28. It is to be noted that proceedings such as those relating to a 'surséance van betaling' have certain features in common with liquidation proceedings, in particular inasmuch as the proceedings are, in both cases, of a judicial nature. They are, however, different from liquidation proceedings in so far as the supervision exercised by the Courts over the commencement and the course of such proceedings is more limited. Moreover, the object of such proceedings is primarily to safeguard the assets of the insolvent undertaking and, where possible, to continue the business of the undertaking by means of a collective suspension of the payment of debts with a view to reaching a settlement which will ensure that the undertaking is able to continue operating in the future. If no such settlement is reached, proceedings of this kind may, as in the present case, lead to the debtor's being put into liquidation.
29. It follows that the reasons for not applying the directive to transfers of undertakings taking place in liquidation proceedings are not applicable to proceedings of this kind taking place at an earlier stage.'
'The first question also refers to the suspension of payments by judicial order ('surséance van betaling'), though the question does not strictly arise in the present case since liquidation followed the order which was made. As I understand it this order is made by the court provisionally on the application of a debtor who considers that he cannot pay his debts. An administrator is appointed and in the meantime debts (other than preferential or secured debts including those to employees) cannot be enforced. The administrator must approve all acts of administration including transfers of parts of the enterprise and dismissal of employees. This provisional order is made without a full investigation by the court, but after a further hearing, of which creditors must be given notice, the court may make a final or definitive order. It seems that in a large number of cases, if the financial difficulties are not resolved, the final suspension order is followed by bankruptcy'.
'On the other hand, it is apparent from the provisions of Italian Law that when the decree ordering the application of the special administration procedure also authorizes the undertaking to continue trading under the supervision of an auditor, the primary purpose of that procedure is to give the undertaking some stability allowing its future activity to be safeguarded. The social and economic objectives thus pursued cannot explain nor justify the circumstance that, when all or part of the undertaking concerned is transferred, its employees lose the rights which the Directive confers on them under the conditions which it lays down'.
'29. In particular, by contrast with insolvency proceedings, the procedure whereby an undertaking is declared to be in critical difficulties does not involve any judicial supervision or any measure whereby the assets of the undertaking are put under administration, and does not provide for any suspension of payments.
30. The economic and social objective pursued by that procedure cannot explain or justify the circumstance that, when all or part of the undertaking concerned is transferred, its employees lose the rights which the directive confers on them (see, by analogy, the judgment in D'Urso, paragraph 32).'
I do not derive any additional assistance from that decision in answering the particular question that arises, on different facts, before us.
'… The court in fact considered that the reasons for not having the Directive apply in the case of insolvency proceedings were not valid when the proceedings in question involved supervision by the court which was more limited than in the case of insolvency and when they were intended primarily to safeguard the assets of the undertaking and, if possible, to keep the undertaking in business by means of a collective suspension of debt payment with a view to reaching a settlement allowing the undertaking to continue operating in the future.'
'29. According to the reference by the national court, in the case of a liquidation the liquidator, although appointed by the court, is an organ of the company who sells the assets under the supervision of the general meeting; there is no special procedure for establishing liabilities under the supervision of the court, and a creditor may as a rule enforce his debt against the company and obtain judgment against it. By contrast, in the case of an insolvency, the administrator, inasmuch as he represents the creditors, is a third party vis-à-vis the company and realises the assets under the supervision of the court; the liabilities of the company are established in accordance with a special procedure, and individual enforcement actions are prohibited.
30. It is thus apparent that the situation of an undertaking being wound up by the court presents considerable differences from that of an undertaking subject to insolvency proceedings and that the reasons which have led the court to rule out application of [the 1977 Directive] in the latter situation may be absent in the case of an undertaking being wound up by the court.
31. That is the case where, as in the main proceedings, the undertaking continues to trade while it is being wound up by the court. In such circumstances continuity of the business is assured when the undertaking is transferred. There is accordingly no justification for depriving the employees of the rights which the Directive guarantees them on the conditions it lays down.
32. The answer to the first question … must therefore be that, on a proper construction of article 1(1) of [the 1977 Directive], the Directive applies in the event of the transfer of an undertaking which is being wound up by the court if the undertaking continues to trade.'
(vi) The domestic authorities
'19. The issue arises in this case because Parliament has declined to specify which particular insolvency proceedings are to be characterised as having been instituted with a view to the liquidation of the transferor company's assets. Nor do I derive assistance from the BERR Guidance to the 2006 TUPE Regulations (issued March 2007) to which I have been referred. In these circumstances I reject [counsel for the appellant's] submission that the answer to the question is purely one of domestic insolvency law; rather, it is in my view a question of fact for the employment tribunal. I accept that where joint administrators continue to trade the business with a view to its sale as a going concern any relevant transfer in those circumstances will attract TUPE protection for employees under reg. 4. However, that is not what happened in the present case on the facts found by Judge Sneath. Having first been consulted by the claimant on behalf of Oldco on 23 November 2006 it is clear from Mr Hull's report that it soon became apparent that due to its weak financial position it was not possible for the administrators to continue trading the business. Instead, immediately following their appointment on 6 December 2007 they took immediate steps to sell the assets to Newco, who took on the lease of Oldco's premises whilst retaining the book debts in Oldco. This was seen as the best course for realising the optimum return for creditors in the final liquidation of Oldco. In my judgment the judge was entitled to conclude that the appointment of joint administrators was with a view to the eventual liquidation of the assets of Oldco, by way of a CVL.
20. Further it seems to me that this construction accords with the policy behind Article 5(1) [of the 2001 Directive] and in turn reg. 8(7); namely the "rescue culture", whereby a purchaser, here Newco, is not put off by the effects of TUPE protection. The outcome, as demonstrated in this case, was that some jobs were preserved and the creditors benefited from the best available option. I note that social policy is articulated at paragraph 22 of the Advocate General's opinion in Jules Dethier.'
' … for my part I would wish to emphasise that there are strong grounds for thinking that both the employment tribunal and the Employment Appeal Tribunal took the wrong approach to their construction both to the [sic] article 5 of the Directive and to regulation 8…'.
After explaining how section 218 saved the day for the claimant/appellant, Moses LJ returned to the quoted theme:
. In these circumstances, adopting the wisdom of Rix LJ, it would seem to me most unwise for us to give a binding pronouncement on the correctness or otherwise of the contention that administration necessarily excludes the application of regulation 8(7). I would only, for my part, wish to emphasise that that is a strongly arguable point, and the only reason I agree that it should not be resolved today is that the Secretary of State is not here and, since Wellswood (Yorkshire) Ltd (Newco) is in the process of being liquidated, almost as we speak, and therefore has no representation here today, it would be unwise to reach and pronounce upon any definitive conclusion. Expressing regret that that cannot be done today, I would allow this appeal.'
(vii) The reasons of the ET
'… the explanation of Ms Shaw is entirely consistent with the proceedings being instituted not with a view to the liquidation of the assets of [DK]'.
'111. The Tribunal considers that this is further confirmed by the Administrators' Report at 4.1 which states "initially it was anticipated that the sale of the business was possible", which would have achieved section 3(b) of Schedule B1 of the 1986 Act. It continues: "In the event, and as explained below, a sale of the business proved impossible". The explanation provided is at paragraph 4.2. "Immediately following our appointment we contacted a practice that had submitted an offer for the purchase of the whole of the business of [DK] with a view to finalising negotiation for the sale of the business. Negotiations were conducted over the weekend of 26th and 27th July 2008". Therefore these negotiations for the sale of the business took place after the Administration Order was made. Accordingly, these circumstances are entirely consistent with the statements made to the Court on the application for the Order, that the Administrator will perform his function with the primary objective of saving [DK] and that there may be a potential third party purchaser.'
'At the time that [DK] went into administration and when I was appointed by the Court as one of the Joint Administrators, there was, in my opinion, no realistic prospect of the LLP surviving administration. It would either have been dissolved or gone into liquidation and in any event it would certainly have ceased to have existed and there was no possibility that it would exit any formal insolvency procedure other than by eventual extinction'.
Judge Freer recognised that letter as cutting across Ms Shaw's assertion in July 2008 that 'the proposed Administrator is not currently in a position to confirm whether or not it is likely to prove possible to rescue the LLP as a going concern' but said that he attached less weight to the letter as Mr Hooper had not been available to be cross-examined.
'113. Mr Scott's evidence was that at the hearing for the Administration Order the Judge required persuading not to put [DK] into liquidation but decided not to because he was persuaded that there were potential buyers who may acquire the business over the weekend. This evidence was put forward by the respondent in support of its contention that when the Administration Order was made there was no hope of rescuing [DK] as a going concern. However, the Tribunal considers that it demonstrates the reverse and corroborates the above conclusions. When the Order was made there was a potential third party purchaser and therefore the proceedings were not, as a matter of fact, instituted with a view to the liquidation of the assets of [DK]'.
114. [Key2] argued that its submissions are consistent with the effective operation of the "rescue culture", but of course there is a balance to be struck with the purpose of the Directive and the safeguarding of employees' rights upon transfer.
115. Having regard to regulation 8(6), the Tribunal first considered the appropriate time at which the assessment is made. Is it at the time that the insolvency proceedings commenced, or is it an assessment of the state of the insolvency proceedings at the time of the transfer? The Tribunal concludes that it is the former. Regulation 8(1) states "If at the time of a relevant transfer the transferor is subject to relevant insolvency proceedings …" and "relevant insolvency proceedings" are defined in regulation 8(6) as "insolvency proceedings which have been opened [Judge Freer's emphasis] in relation to the transferor not with a view to the liquidation of the assets of the transferor and which are under the supervision of an insolvency practitioner".
116. Accordingly, the Tribunal concludes that, having regard to the findings and conclusions above, the insolvency proceedings of [DK] were opened not with a view to the liquidation of the assets. Accordingly, regulation 8(6) applies and regulation 4 does not operate to transfer liability for the sums payable to the Claimant under the relevant statutory schemes set out in regulation 8(4).'
(viii) The judgment of the EAT
'We should note a point about the phrase "bankruptcy proceedings". The equivalent terms in the versions of the Directive in other languages are generally not, like "bankruptcy", specific to personal insolvency. Using "bankruptcy" as the primary term reads a little oddly to an English lawyer, given that in most situations where the Directive applies the employer will be a corporate entity; but the "analogous insolvency proceedings" would of course cover corporate insolvency. The crucial point is that the proceedings, however described, should be instituted with a view to liquidation.'
'14. In our view it is clear that the distinction in art. 5 of the Directive between liquidation proceedings (defined precisely as in para. 23 of the judgment of the Court) and other forms of insolvency is intended to reflect the reasoning in Abels. There is confirmation of that in the explanatory memorandum produced by the Commission at the time of the proposals which led to Directive 98/50/EC: paras, 22 and 23 of the memorandum refer explicitly to Abels and the intention to take into account the case-law of the Court.'
'… the object of such proceedings is primarily to safeguard the assets of the insolvent undertaking and, where possible, to continue the business of the undertaking by means of a collective suspension of the payment of debts with a view to reaching a settlement which will ensure that the undertaking is able to continue operating in the future. If no such settlement is reached, proceedings of this kind may, as in the present case, lead to the debtor's being put into liquidation'.
The focus was, therefore, on the 'object' of the SvB procedure. Likewise, in D'Urso, the court's focus was on 'the purpose of the procedure in question' (see paragraph 26 of the judgment). That turned on whether the decree made under the relevant Italian law did or did not authorise the continuation of trading by the insolvent company under the supervision of an auditor. If, as in D'Urso, it did, the purpose of the decree was:
'… to give the undertaking some stability allowing its future activity to be safeguarded. The social and economic objectives thus pursued cannot explain nor justify the circumstance that, when all or part of the undertaking concerned is transferred, its employees lose the rights which the  Directive confers on them under the conditions which it lays down.' (Paragraph 32 of the judgment).
'… put forward by [Key2] in support of its contention that when the Administration Order was made there was no hope of rescuing [DK] as a going concern. However, the Tribunal considers that it demonstrates the reverse and corroborates the above conclusions. When the Order was made there was a potential third party purchaser and therefore the proceedings were not, as a matter of fact, instituted with a view to the liquidation of the assets of [DK].'
Mr Justice Warren :
Lord Justice Longmore :
"subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor …"
within regulation 8(7) of the 2006 TUPE regulations. If it is so subject, then regulation 4 of TUPE will not apply.