Employer in administration

Unite and others v Nortel Networks UK Ltd (in administration) [2010] EWHC 826 (Ch) TLR 18 May

A claim by an employee against an employer in administration does not require a judgment to render it provable just because of the nature of the claim and the nature of the decision on which any award depended. Accordingly, there was no reason why the claims of the employees against the employers in administration were exceptional so as to justify permission for their continuation and the lifting of the moratorium which otherwise applied in the administration. Their application for permission to continue with their claims was dismissed. They still had claims and would have had claims even if actions had not been commenced. Their position in relation to the moratorium on claims was not different from that of any trade creditor or unsecured lender. As to the nature of the claim, each claim was either a debt or liability to which the company was subject to the date of administration, or a debt or liability to which it became subject after the date of administration by reason of an obligation incurred before that date. In any event, the court should incline towards restricting the category of claims that were not provable. It did not seem desirable, especially in relation to employees, to create a category of claim that could not be dealt within the insolvency process and was otherwise recoverable. As to the nature of the decision, the exercise of judicial discretion is a process entirely distinct from judicial adjudication.