Regulation 31: Liquidation / Administration / Receivership / Death / Bankruptcy with a Goods Vehicle Licence

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Have you thought about how your Goods Vehicle Licence would be impacted if you went bankrupt, or if your company went into administration?

Regulation 31 applications are few and far between, however knowing when you can apply is useful if you do find yourself in one of these scenarios.

Jared Dunbar breaks down the guidance on when you can request for the trade or business to be continued:

Individuals

When an individual holding an Operator’s Licence dies, or lacks mental capacity, or is made bankrupt, Regulation 31 of the Goods Vehicles (Licensing of Operators) Regulations 1995 applies.

Companies  

Regulation 31 applications also apply to a company going into liquidation, administration or receivership.

Operators should be aware that with a company which has financially struggled, the Traffic Commissioner (TC) would expect the directors of a company to have notified the OTC prior to any administration taking place.  A failure to inform the TC of a material change in circumstances may lead to adverse conclusions being drawn against those directors.

The Reg 31 procedure allows an administrator to take over the running of the Operator’s Licence during a period of administration.

The case law provides the following guidance on this type of application:

  1. Once an administrator is appointed, they must decide whether to carry on the transport business of the company. If they decide not to, the licence should be surrendered.
  2. If the administrator decides to carry on the transport business of the company, they must make an Reg. 31 application.
  3. Where the administrator decides to appoint someone else, the terms of the agreement will need to be considered with care. An administrator who makes an application should provide the TC with a copy of the agreement with the application or as soon afterwards as possible.
  4. If the administrator does nothing, the company is likely to be called to a Public Inquiry on the grounds of loss of good repute, loss of financial standing and, possibly, unlawful operation.
  5. If the company was called to a Public Inquiry before being put into administration, the PI will still take place. If the administrator decided to continue the transport business, by making an application, it is likely that both matters are considered at the same Public Inquiry.
  6. If the company is in administration at the time of the Public Inquiry, the main issues are likely to be the good repute and financial standing of the administrator. If the previous directors of the business (or any of them) have been appointed to manage it then their good repute will also be in issue and any past conduct, especially in relation to the company before it went into administration, is likely to be relevant.

The Regulation 31 application form must either be completed and signed by the liquidator, administrator or receiver (or be accompanied by written authority for some-one else to correspond).

A former director does not have the authority to make this application. Insolvency practitioners are often not aware of these provisions.

Administrators usually have a 21-day window from the Notice of Intention to try and secure the employment for the employees of the business.

Regulation 31(4), makes it clear that the applicant must actually be carrying on the trade or business which indicates that the administrator cannot make an application until the Notice of Appointment.

An application must be determined by a TC at an oral hearing with all parties and witnesses given the opportunity to attend. The hearing will often be at short notice due to the urgent nature of such applications.

The TC may also decide to hear evidence of any likely new application by a new entity at the hearing.  If, having heard all oral and written evidence the TC determines that it is appropriate to allow the regulation 31 application, the TC must indicate the duration of any order.

These situations are rare, and it is sensible for both the operator and the administrator to seek advice to fully understand the implications of the procedure and receive guidance on completing the application process.

For legal advice on Regulation 31 applications or representation at Public Inquiries, contact Jared Dunbar.