What happens next?
Following the formal insolvency of a business, the practitioner who has been appointed to manage its affairs has several options:
To send the employees home whilst the financial position of the employer is established to determine what strategy to adopt;
The practitioner may have already entered into and possibly sold the business. In this scenario the employment contracts of the employees transfer over to the purchaser under Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and business would typically continue as normal;
Request the employees continue to work, usually to either provide time to try and sell the business as a going concern or to generate added value from the assets of the entity; or
Immediately close the business down.
These possibilities, in particular the latter 2 may result in employees being made redundant. These scenarios are looked at in the next sections.
Usually shortly after a practitioner has been appointed, they or their staff will speak to the employees to explain the situation.
