Another high profile compulsory liquidation hits the headlines


British Steel has been placed into compulsory liquidation, placing thousands of jobs at risk.  It appears the government had to appoint an official receiver because British Steel's bank and hedge fund lenders were not willing to fund a traditional administration.

The position is reminiscent of Carillion's collapse.  Whilst the effect of compulsory liquidation would normally be to automatically terminate employee contracts, staff remain employed for the time being while a potential buyer (or buyers) is sought.  However, even if a buyer is found, TUPE provisions are relaxed in terminal insolvency situations and therefore employees would not automatically transfer.  There would also be no protection from unfair dismissal as the dismissal is by operation of law.  Whilst employees could have claims for wrongful dismissal (notice pay), as well as for any unpaid wages and a statutory redundancy payment, this is likely to be of little comfort. 

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Roy Rickhuss, general secretary of the steelworkers' trade union, Community, said: "This news will heap more worries on workers and everyone connected with British Steel, but it will also end the uncertainty under Greybull's ownership and must be seized as an opportunity to look for an alternative future. It is vital now that cool heads prevail and all parties focus on saving the jobs."
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