Rebellion not legally bound to pay Derby employees

It looks like Rebellion may not have to fork over the money owed to its former Derby employees, if attorney Jas Purewal of Olswang LLP and writer of GamerLaw is correct.

According to Purewal, the parent company's ability to pay its subsidiary is "is not dependent on its parent company's situation".

"The mere fact that it has a solvent parent company is immaterial," he told GI.biz. "Since generally parent companies are not legally obliged to rescue their insolvent subsidiaries. A parent company is only liable to contribute funds to its insolvent subsidiary if there is some pre-existing debt which the parent already owes to the subsidiary.

"Generally if there is no debt, there is no obligation.

"Employees of an insolvent company are termed 'preferential creditors' and are therefore entitled to have their wages and redundancy payments paid to them in priority to most other creditors' claims.

"However, this depends entirely on whether the insolvent employer company has the funds to actually pay them with.

"It's worth bearing in mind though that if you are made redundant by a company in the UK and that company is unable to pay you, there is a statutory body called the Redundancy Payments Office. The office was set up expressly to help employees where their companies either cannot or will not pay them."

According to
ex-Rebellion Derby emplyees, the developer has yet to pay wages for the month of April and are worried that their redundancy packages may be withheld since the shut-down of the office back in March.

Best of luck to them.