We have seen an increase in our education clients seeking advice around potential insolvency, therefore we thought it would help to highlight our previous podcast, which outlines some prudent steps that trustees should be taking to minimise their risk of being personally liable in an insolvency situation.
The Covid-19 pandemic has had a considerable impact on the already financially stretched education sector and we have seen an increase in our education clients seeking advice around potential insolvency. We therefore thought it would help to highlight our previous podcast from June 2018, which outlines some prudent steps that trustees should be taking to minimise their risk of being personally liable in an insolvency situation.
You can listen to the podcast on SoundCloud.
It is important to note that the UK Government has now reintroduced the temporary suspension of wrongful trading measures from 26 November 2020 until 30 April 2021, pursuant to the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020. The suspension was originally introduced in March 2020 under section 12 of the Corporate Insolvency and Governance Act 2020 but expired on 30 September 2020.
Wrongful trading is where directors can be personally liable to make a contribution to the company’s assets or liabilities incurred, if they continue to trade when they knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation or administration. Even if a finding of wrongful trading could be made out, the protection offered to directors is that they are not expected to personally contribute for any worsening of financial condition of the company within the relevant periods.
Whilst some comfort can be taken from the reintroduced suspension of wrongful trading (removing one threat of personal liability which directors may face), the actions of directors could still be subject to scrutiny if, ultimately, insolvency proceedings are later entered into. Therefore, directors must continue to adhere to their other statutory duties whilst continuing to trade the business. There has been no relaxation of directors’ fiduciary and statutory duties, nor of the rules on fraudulent trading, and so directors are well advised to continue taking all of the usual precautions. Incurring debts in the full knowledge money will run out, with no reasonable prospect of a solvent solution, may still mean directors could face consequences for breaching their statutory duties or indeed for fraudulent trading, if the circumstances merited such.
Regardless of the outcome of ballots on industrial action, unless there is drastic change to funding for schools in relation to pay increases, it will be unusual to find any organisational budget that is not impacted by the current economic situation.
There’s been little evidence of interventions or financial management reviews this year and it appears the Education and Skills Funding Agency (ESFA) has re-focussed on financial delivery. It’s also telling that there were no discernible changes to the reporting of financial irregularities in the Academies Trust Handbook 2022.
The Children’s Commissioner, Rachel De Souza, has recently published a report “Beyond the labels: a SEND system which works for every child, every time”, which she intends to sit alongside the DfE’s SEND Review (2019) and SEND Green Paper (2022) and which she hopes will put children’s voices at the heart of the government’s review of SEND system.
As well as providing day-to-day support to help you focus on managing your settings, we also provide training and professional development on a range of topics to keep you and your staff up-to-date.
The Equality and Human Rights Commission (EHCR) recently issued new, non-statutory guidance regarding the wearing of natural or protective hairstyles, specifically in reference to their representation in uniform, behaviour or standalone appearance policies.
Emma Hughes, head of HR services at Browne Jacobson, explains how CST’s updated executive pay report and the linked benchmarking service from XpertHR can help trust boards make robust decisions on pay.
There’s greater opportunity than ever for parents, carers and guardians to voice any concerns they have relating to their child’s education and for their concerns to be heard and to be taken seriously. While most staff in schools and academies are conscious of their legal duties relating to complaints management, many are struggling to cope with such a significant increase in the volume of complaints they must manage.
This guidance has been prepared to support academy trusts (Trusts) who want to hold a fully virtual Annual General Meeting (AGM) or a hybrid AGM, as we know that Trusts may want to be prepared for future disruption as well as having a general interest in holding more meetings virtually. The guidance also applies to other meetings of the Members (known as General Meetings).
We’re pleased to collaborate with Lloyds Bank, who recently asked us and audit and risk specialists Crowe UK to offer guidance that academy trusts would find helpful when considering setting up a trading subsidiary.
The DfE has published new guidance and opened the application process for window two of the Trust Capacity Fund (TCaF) for 2022/2023, with a fund of £86m in trust capacity funding focused particularly on education investment areas.
The Independent Inquiry into Child Sexual Abuse was established in March 2015. We now have its report. As you would expect with such a broad scope, the report is long and makes a number of far-reaching recommendations. In this article, Dai Durbridge highlights seven of the 20 recommendations, sets out how they could impact on schools and suggests what steps to take now.
Browne Jacobson’s education team has been named as winner of the ‘Legal Advisors to Education Institutions’ category at the Education Investor Awards 2022 for a record sixth time.
Since the new Suspensions and Exclusions Statutory Guidance was published, we have received a lot of questions about the use of managed moves. For the first time, the Statutory Guidance does explain what a managed move is, but in relatively broad terms and does not cover the mechanics of how a managed move should operate.
Over 3000 young people from across the UK and Ireland took part in a virtual legal careers insight event, aimed at making the legal profession more diverse.
Holly Quirk, an associate barrister in Browne Jacobson’s Manchester office, was awarded the Legal Professional of the Year Award at this year’s Manchester Young Talent Awards.
The risk of assault against staff is, sadly, something that all schools need to consider carefully. Here one legal expert explains what they can do to protect staff and ensure they fulfil their duty of care.
An engineering company in Tyne and Wear was fined £20,000 after a worker fractured his pelvis and suffered internal injuries after falling through a petrol station forecourt canopy, whilst he was replacing the guttering.
Browne Jacobson’s education team has again been confirmed as a national powerhouse after securing five Tier 1 rankings relating to Education in the latest edition of Legal 500 and maintaining a Band 1 UK-wide ranking for Education in Chambers & Partners UK 2023.