acquisitions workshop 7

Written notice of the assignment must be given to each debtor (s136 LPA 1925)

• - Complicated to give accurate definitions of debts and liabilities involved
• - Difficult to give notice to all debtors
• - Difficult to value book debts
• - Buyer will suffer a cash flow disadvantage
• - Buyer will bear the risk if some debts prove irrecoverable

• - Seller may not pay off creditors promptly
• - Seller may be too heavy-handed in chasing debtors

This will mean the loss of goodwill in the company. Appropriate undertakings should be put in place

- After completion seller may no longer have the means to chase debtors

The buyer could instead collect as the seller's agent (usually on payment of a collection fee)

No. Only to an asset acquisition

This is a question of fact.

You need to consider the test in Botzen v Rotterdamsche Droogdok. Whether there is a transfer of the part of the undertaking to which the employees were assigned and which formed the institutional framework within their employment relationship took effect.

No.

Although the test is whether a person was assigned to undertaking rather than a part, this would be fraudulent and therefore void. The employee was NOT 'employed in the part of the undertaking' being transferred (Carsway Clearning v Richards)

Yes. If he did not know the identity of the transferee at the time and does so promptly (New IDG v Vernon)

• 1. Criminal liabilities
• 2. Ones relating to occupation pension schemes

• 1. When it arises due to the transfer or
• 2. Due to a non ETO reason to do with the transfer

• To bring a claim the employee must have at least one year's service.
• Note: transferee will also be responsible for employees left behind if they are got rid of for these reasons.

Yes.

There is currently no authority supporting this

• This is a question of fact:
• - If it occurs shortly before or after the transfer it is likely to come under Reg.7
• - If dismissed prior to transfer employee will come under reg 7 if he can prove at the time of his dismissal that a transferee had been found and that dismissal was related to the negotiation

Less clear if it will be covered when in contemplation of transfers generally but likely it will (Morris v John Grose Group)

• - If for a non-ETO reason then the buyer will be liable for dismissal claims
• - If for an ETO reason then the seller will be liable

- If for a non-ETO reason then an alteration in the terms and conditions of employment will be void

Either redundancy or for some other substantial reason under s91(1) and s135 ERA 1996.

Even if a reason can be estalbished, the employer must show that he acted reasonably (s98(4) ERA 1996)

• - Reason relating to profitability or market performance
• - Reason relating to nature of equipment or production process
• - Reason relating to management or organisation structure

• - Dismissing employees to obtain an enhanced price (Wheeler v Patel)
• - A reason relating to the transferee and not to the future conduct of the transferor (Hynd v Armstrong)

• A change in the workforce.
• - This must be a change in the composition of the workforce of a substantial change in job descriptions, sometimes a real change in the functions of the workforce will suffice

• - Full details of employment matters
• - Employees' contract terms (little opportunity to vary these)
• - Which employees are working on/assigned to the undertaking being transferred

Because the buyer will inherit all employee related liabilities.

Yes.

- That employees are only those listed in the schedule, that there are no disputes etc

- That there have been no dismissals due to transfer/Non ETO reason and that there have been no variations in contracts due to transfer/Non ETO reason

Yes

E.g. For liabilities arising out of all outgoings re employees such as holiday pay or on any claims attributable to any breach by the seller of its employment obligations prior to completion

• Discrete shcee:
• - Employees remain in the scheme following acquisition. Check whether scheme is in surplus or deficit (this will affect the purchase price)

• Group scheme:
• - A transfer payment from the group scheme must be made to the buyer's scheme