Asset Acquistion And Tupe Notes

With reference to TUPE, the best thing to do is to read the Text Book pages 134 to 143 and cross reference the reading to the flowcharts on pages 150 and 151.

With Reference to the Asset Acquisition we quickly looked at the advantages and disadvantages between

We then Looked the difference between Novation, Assignment and Getting a whole new Contract.

Prep Task

Note: The answers to the questions are outlined here. You need to go directly to each clause to see how it answers the question. The Clauses are self-explanatory and therefore this is just the skeleton. Where more comment is needed I have added it.

Question 1 How does the agreement provide for the transfer of contracts where third party consent to the transfer is required but has nor been received by Completion?

Clauses 6.2(a)

Clause 6.2(b)

Clause 6.3

Clause 4.1(viii)

Question 2. Does the Agreement protect our clients passion in relation to any contracts that…

No protection in the agreement and therefore S will want a covenant form the B that it will meet obligations and that B will indemnify the S for any costs that it may incur for not performance by B of those contracts.

The contracts are transferred buy not Novated. Seller will have the burden while the B while have the benefit.

Question 3. Under the terms of the Agreement, what action must….

Book Debts are a benefit for the Buyer (these are debts owed to the company by DEBTORS)

Clause 2.1(c)

Clause 8

The value of the Book Debts is included in the purchase price. The buyer does not need to pay for the Valuing the Book Debt. See Note on YourLPC for what the Buyer can do on the DEBTORS side.

Question 4. How does the agreement provide for the transfer of….

Creditors are a burden for the Buyer (The business owes the money to the creditors)

Check the definition of creditors with the client – only trade creditors?

SPA is very Buyer friendly with regards to the creditors. See Note on YourLPC for what the Seller can do on the CREDITORS side.

Question 5. How does the Draft Agreement….

Clause 2.1 (Note the Business as a going concern)

Clause 2.2

Clause 2.3

B will want to add a warranty from the seller that all the listed assets in the SPA are all the assets necessary for the business (if the S breaches the warranty the Buyer may have some remedy)

Question 6.

Clause 2.1

Clause 4.1(b)

Clause 4.3

Question 7.

Clause 10 (restrictive covenants to protect the )

The problem with constructive covenants is that they may not be enforceable if they constrict trade. Therefore, the restrictive covenants should be reasonable.

Workshop Task

Question 1

Step 1: Will TUPE apply?

• TUPE applies only to Asset Acquisitions

• Regulation 3. TUPE applies only to Relevant Transfer

“A transfer of an undertaking, business or part… situated immediately before the transfer in the UK… where there is a transfer of an economic entity which retains its identity”

Step 2: Automatic transfer if employee assigned to organised grouping (unless employee objects)

• Regulation 4(1) (there is an automatic transfer of contractual rights and obligations(including employment claims such as UD, WD and redundancy, but not, criminal liabilities and some pension...

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