Transfer of Ownership

Hi all,

If a company is being taken over by another company what are the legal issues if it is being handed over for free?

Currently the company is run as a small playschool but it is no longer viable so we are considering handing it over to the private playschool in the next town who want to take it over and run it.

It owns no property apart from the toys in the building that we rent. It employes 3 staff who will be kept on by the new company.

Is it as easy as simply handing it over and having them sign some paperwork or is there more legal thing's we must do to hand it over?

Thanks for your help.

pedronomix

Is it a Ltd company? or are they just taking over the trade and the emplyees? If they take over a company they also take on any contingent liabilities such injury claims/creditors etc etc

pedronomix

pedronomix wrote: »

Is it a Ltd company?

No, the business taking it over will be, but the playschool is voluntarily run by a committee but the staff are employed.

pedronomix

So they are not taking over a company as none exists!! I assume the voluntary group had liability insurance, so that should be OK. The Transfer of Undertakings in relation to the employees will be the main issue... see this http://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/contracts_of_employment/transfer_of_business.html

antoinolachtnai

The other big issue I see is liabilities which are hidden. The new owner won't want to take on the liabilities of the old business. The issue here is going to be if there are any claims (claims for compensation, basically) against the business. These might not even have been made yet, but might emerge.

The problem is that if these claims were to emerge, what would happen? Who would defend the claims? Who would pay? The problem you face is that if there were a problem and no insurance to cover it, the members of the voluntary committee might be personally liable. It could take a few years for claims to emerge. If you have insurance in place, this should not be a big deal, and selling or giving away the business does not create any additional burden that the members did not already have, but you do need to consider the issue.

You would have to consider what will happen to the lease on the building you're renting if there is a long lease.

Good luck with your project, I hope it works out really well.

pedroeibar1

antoinolachtnai wrote: »

The other big issue I see is liabilities which are hidden. The new owner won't want to take on the liabilities of the old business. The issue here is going to be if there are any claims (claims for compensation, basically) against the business. These might not even have been made yet, but might emerge.

The problem is that if these claims were to emerge, what would happen? Who would defend the claims? Who would pay? The problem you face is that if there were a problem and no insurance to cover it, the members of the voluntary committee might be personally liable. It could take a few years for claims to emerge. If you have insurance in place, this should not be a big deal, and selling or giving away the business does not create any additional burden that the members did not already have, but you do need to consider the issue.

You would have to consider what will happen to the lease on the building you're renting if there is a long lease.

Good luck with your project, I hope it works out really well.

I disagree. Is it not already rather obvious from the other Pedro's posts and the OP's responses that the above concerns are not an issue so your proposals and "advice" are somewhat "off"? With a really hard push this might at best be described as an asset transfer transaction - it certainly is not a share purchase as the old operation is not a registered business with legal personality. Any claims against the old business activity are againts the people running that, not the company that will soon occupy the space. Even TUPE is questionable IMO (unless the companying taking on the assets already has an existing operation and staff.)

If in doubt OP, get legal advise, as you cannot have given the full details in what you posted. Best of luck and start planning now for summer activities. (Hard to think about that in this rain!:cool:)

pedronomix

If the employees have acquired employment rights, these must be honoured, either by termination by the existing employer or by TUPE,

pedroeibar1

pedronomix wrote: »

If the employees have acquired employment rights, these must be honoured, either by termination by the existing employer or by TUPE,

You are quite right – my use of the word “questionable” above was loose. What I meant is that the impact of TUPE is limited - while the employment contracts transfer it does not follow that all pension-related obligations do. (This was very relevant in the Gordon acquisition of the Clerys business that we discussed on the other thread.) The fact that it is a newly created entity (i.e. no staff) taking on the assets also simplifies any changes to employment, redundancies, etc..

antoinolachtnai

pedroeibar1 wrote: »

I disagree. Is it not already rather obvious from the other Pedro's posts and the OP's responses that the above concerns are not an issue so your proposals and "advice" are somewhat "off"?

I think your tone is somewhat 'off'. But that has not got much to do with anything.

With a really hard push this might at best be described as an asset transfer transaction - it certainly is not a share purchase as the old operation is not a registered business with legal personality. Any claims against the old business activity are againts the people running that, not the company that will soon occupy the space.[/quote]

That was exactly why I raised the issue of how these historical claims (if they were to arise would be dealt with as they would appear to fall to the members of the committee personally (which presumably includes the OP or the OP's friends).

If in doubt OP, get legal advise, as you cannot have given the full details in what you posted. Best of luck and start planning now for summer activities. (Hard to think about that in this rain!:cool:)

If the OP decides to get legal advice, he or she needs to make sure they are not left out of pocket for the cost of that advice.

Mrs OBumble

Deleted User wrote: »

No, the business taking it over will be, but the playschool is voluntarily run by a committee but the staff are employed.

Who are they employed by? Is their PAYE and other taxes up to date?

What's the VAT situation?