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Carluccios and administration: the High Court allows administrators to furlough employees

Author: Edwin Coe LLP

Published: 21 Apr 2020

On 13 April 2020, in the first ruling of its kind, the High Court provided much needed clarity on the application of the Coronavirus Job Retention Scheme (the Scheme) for companies that have entered into administration.

The Court expressed a willingness to assist with the policy objectives of saving jobs, and this may be the first in a series of authorities curbing traditional vested interests in favour of collective processes.  

This judgment provides welcome and timely clarification of the Scheme, and its interaction with traditional administration as a restructuring tool. Whilst waiting on the arrival of the rumoured debtor in possession restructuring process, this judgment does more than answer the narrow point about administrators and furlough; it underlines that administration is not liquidation, and that administration can be a useful tool in achieving the business hibernation that is so clearly needed.

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