Rebellion Not Paying Out Redundancy to Closed Derby Studio?

An interesting story is emerging over UK developer Rebellion’s decision to close its Derby studio back in March. A wife of an employee there has contacted GamesIndustry.biz claiming that employees haven’t received wages or redundancy packages that had previously been promised.

The email alleges that the Aliens vs. Predator developer are ‘œclaiming ‘financial difficulties’ as the reason for non-payment of wages and redundancy packages’ but that there has been no official documentation over the issue and according to the employee’s wife, Rebellion is claiming that as ‘œRebellion Derby is registered as a separate legal entity, and it’s not currently making money, that [there] is no money to pay their remaining, and just left employees.’

GamesIndustry.biz contacted Jas Purewal, who writes for the GamerLaw blog and has said that Rebellion Games has no obligation to pay the Derby studio unless the parent company (Rebellion in Oxford) owes the insolvent company (Rebellion Derby) money. Purewal said:

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.

Which puts Rebellion Derby employees in a situation, according to Purewal, where they could go to a government body called the Redundancy Payments Office which deals with these situations.