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CJRS: interaction with insolvency proceedings

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Two recent non-tax cases highlight some of the issues the CJRS is creating in many real-world situations.

In Debenhams [2020] EWHC 921 (Ch), the employment contracts of furloughed employees were taken to have been adopted by the administrators, making the company liable for the shortfall between the sums reimbursed under the scheme and the salary payments due under the employment contract. In this unfortunate situation, the scheme which was clearly designed to preserve both businesses and jobs led to a shortfall of some £3m per month, potentially undermining efforts to rescue the business.

In Carluccio’s [2020] EWHC 886 (Ch), furlough was available to the administrators as an alternative to redundancy, where there was a reasonable likelihood of the employees returning to work for the company or another employer who went on to acquire the business following a sale by the administrators.

Issue: 1485
Categories: News