Job doubts linger over law changes

An emergency Bill rushed through Parliament this week to reverse a court decision threatening thousands of jobs in failing companies, does not cover Law of Property Act (LPA) receiverships, which often entail hotels.

LPA receivers are sent in by banks and building societies to recover single big assets, such as office blocks and hotels.

When a hotel is placed into receivership, the LPA receiver generally wants to keep it trading, which means keeping most of its staff.

Under the Court of Appeal ruling, which was delivered on 22 February this year, a receiver who continued to employ staff beyond 14 days had, in effect, "adopted" their contracts.

This would have meantreceivers were liable for pay in lieu of notice, holiday entitlements and other benefits.

If the court's ruling had been allowed to stand, it would almost certainly have led to a much higher loss of jobs in the hotel industry.

However, the omission of LPA receiverships from the emergency Bill is understood to be causing concern at the Royal Institute of Chartered Surveyors.

According to Nigel Atkinson, a partner in the corporate services department at Touche Ross, the original court ruling would have put any insolvent hotel or a hotel in receivership in a difficult position.

"The cost of the receivership would have been much higher and it would have been necessary to sell quickly, at a lower price, or cease trading altogether," said Atkinson.

Mr Atkinson added that the threat of insolvency has been receding and that hotels which are insolvent have seen improvements in their trading.