Commercial Lunchtime Webinar Series – Business continuity on and after insolvency

This webinar focused on business continuity in the insolvent context, particularly covering Phoenix companies and related risks for directors. Carol Cheng presented the first section, explaining what Phoenix trading involves. She outlined three key rules governing Phoenix companies: restrictions on using the insolvent company’s name for 5 years, requirements for proper independent valuation of assets sold to connected parties, and provisions for setting aside preference transactions and transactions at an undervalue. Carol also discussed the relationship between Phoenix trading and pre-packs, highlighting differences in process and structure. Fergus McCombie then covered additional risks for directors, including the impact of TUPE regulations in insolvency contexts, with important distinctions between liquidation and administration scenarios. He explained how TUPE disapplies in liquidation proceedings but applies in administration and referenced recent case law on this topic. Fergus also discussed restrictive covenants in business sale contexts, distinguishing between employment and shareholder agreement covenants, and highlighted the importance of fiduciary duties continuing for former directors.