Advice Needed -Employer winding up order during Employment Tribunal Claim. Insolvency

[kcylok1990]

Claim has been made for unfair dismissal, wrongful dismissal and illegal deduction of wages (the case is pretty strong in favour of the claimant). A hearing was scheduled for Aug 2023. The respondent (employer) pleaded ignorance saying they never received any notice of legal action citing that the address on the ET1 form was incorrect. The employer reluctant turned up to the hearing in Aug 2023. The address on the ET1 form was proved to be that of the employer however, the judge awarded the respondent an extension of 30 days to respond to the ET1 form from the Aug hearing date on the basis of prejudice (this became a prelim hearing). This then pushed a new hearing date back to Jan 2024. My concern was that the employer was seeking an extension to kick the can down the road and to 'phoenix' the company in order to diminish any legal responsibility.

In Dec 2023 the employer has had a compulsory winding up order issued by the High Court and an official receiver has been appointed.

Does this now mean that the ET claim is dead in the water? If so it feels very unjust.

Is there a way to get the stay of proceedings lifted? I know they can be lifted through a High court application however this is costly. I have also asked the Official receiver if they can approve the lifting of stay on proceedings however they have refused.

I know the employer might not be able to pay out even if an award is won at the ET and that such an award would be at the bottom of the list of creditors during insolvency however, I would be looking to make a claim through the National Insurance Fund if award is won.

Is any able to offer any advice?

[ULA]

if you were to be successful in your employment claim, then will need to claim an award as part of the winding up process. Any protective award made in respect of the period prior to insolvency would be considered a preferential debt. Other tribunal awards, such as the basic and compensatory awards for unfair dismissal or damages for discrimination or wrongful dismissal, rank equally with other unsecured debts and so are unlikely to be paid out in full or at all.

As you have said you may also be able to claim any award from the NIF.

So effectively the ET claim is not "dead in the water" you will just have to work through how to apply for any award the Tribunal may order to be paid of you win your claim/s.

[kcylok1990]

Thank you for you're response. Does this mean that I can still pursue the ET claim even if there is a 'stay of proceedings?' The hearing date is in 10 days. Now that there is a winding up order I doubt anyone will turn up to the hearing from the ex employer.

[ULA]

Sorry a bit confused you say that a compulsory winding up order has been made and the you talk about stay of proceedings. Has there been an application to "stay" the liquidation and if so by whom?

[kcylok1990]

- A creditor applied to the high court for a winding up order against the ex employer.

- The high court issued a winding up order against the ex employer mid December 2023. Pursuant to section 130(2) of the Insolvency Act.

- An official receiver and liquidator was appointed mid December 2023.

- The ex employer is in compulsory liquidation, am I right in thinking this automatically puts a 'stay of proceedings' on the ex employer?

- If this is the case would I still be able to pursue the claim?

- This winding up order has been made during my litigation against the ex employer.

I hope this gives a bit more info. Thank you for your help thus far.

[ULA]

The fact that the company has gone into liquidation does not automatically stay the litigation proceedings. The liquidator may apply for a stay under section 112(1) of the Insolvency Act 1986 as they are unlikely to want to continue with litigation. Until a stay is ordered then parties should continue to comply with any any tribunal orders. I would have thought that the first step would be to contact the liquidator to find out their view on the situation.

[kcylok1990]

I contacted the official receiver and their office replied stating that, 'a winding up order was made against the named company on the 13th Dec 2023 the official receiver is the liquidator.'

'In light of these circumstances I would ask you to note the following:

Where the official receiver, liquidator or trustee, receives notification of proceedings being brought in an Employment Tribunal against the insolvent by an employee, the Tribunal and the claimant should be informed of the insolvency proceedings and reminded that proceedings may not be brought or continued without the leave of the bankruptcy court (Section 130(2)).'

The official receiver's office shut down my request to continue the claim. Are they able to do this?

I referred to S.58.59 of the Technical Guidance for Official Receiver's by the Insolvency Service, which states the following:

'It may be the case that the employee is bringing a claim in order to establish a liability that may be claimed from the National Insurance Fund (in respect of a claim for unfair dismissal, for example). In such a case, the official receiver should not object to such a claim proceeding providing that no order is made against the property of the insolvent or against the official receiver personally, and should write to all parties in these terms.'

Where do you think this leaves my claim with the ET? Could it still be pursued?

[ULA]

So you referred the official receiver (OR) to

58.59 A claim with an Employment Tribunal at the date of the order which states:

"Where the official receiver, liquidator or trustee, receives notification of proceedings being brought in an Employment Tribunal against the insolvent by an employee, the Tribunal and the claimant should be informed of the insolvency proceedings and reminded that proceedings may not be brought or continued without the leave of the bankruptcy court (Section 130(2), Section 285(2)).

It may be the case that the employee is bringing a claim in order to establish a liability that may be claimed from the National Insurance Fund (in respect of a claim for unfair dismissal, for example). In such a case, the official receiver should not object to such a claim proceeding providing that no order is made against the property of the insolvent or against the official receiver personally, and should write to all parties in these terms."

The referral to the fact of trying to establish lability which if found in your favour would allow you to claim from the NIF was not accepted by the OR is that what you are saying? If that is the case, I need to check whether you can escalate or appeal this

Is the OR prepared to provide you with a unique CN reference?

[kcylok1990]

Yes I referred S.58.59 to the official receiver and it was not accepted by them to continue proceedings. They state that 'the only way that permission to continue the claim can be obtained is by an application to the bankruptcy court. Only if an application to Court is made can the Official Receiver consider whether it is appropriate to object to the application or remain neutral as to the continuation of the claim. We cannot grant permission for the claim to continue without an application for leave having been made to the Court.'

Yes the official receiver said they would supply a CN reference number once received from the redundancy payment service.

Your help is really appreciated.

[ULA]

I am not sure how best to advise if the official receiver is saying you need to make an application to the bankruptcy court. I am assuming that such an application would incur a fee.

If the official receiver can supply a CN reference number then you may be able to recover some of the monies being claimed depending on whether they meet the criteria. However I would suspect that without a Tribunal ruling on some of the claims in the claimants favour set out in your post #1 these could not be claimed for.