If you are considering purchasing a business which holds an operator licence, or you are an administrator about to take responsibility for such a business, it is essential to consider the implications on the operator licence before the sale or the administration takes effect.
In circumstances of administration or sale of business assets (rather than a share sale), the existing licence would cease to be valid.
Our tips to ensure that vehicles remain on the road following purchase/ administration are:
It is important to consider the correct course of action when preparing for the purchase or administration of a business; failure to do so can lead to the Traffic Commissioner revoking, suspending or curtailing a licence.
In the event of an asset sale, or upon administration, the existing licence would not be valid for use.
Notifications and applications regarding the operator licence have deadline requirements and applications have significant lead times before they can be completed. Proper planning can ensure the licensing requirements can be tied in with the rest of the transaction timetable.
Due diligence of the company should include consideration of its regulatory compliance history and its past dealings with the Traffic Commissioner. Consideration should be given to whether any previous regulatory enforcement action has been taken against the operator and, thus, whether there is a risk of the licence being revoked due to non-compliance.
Certain changes to a vehicle operator’s business require the operator to notify the Traffic Commissioner. In some cases notification can be done online with relative ease. However, other proposed changes will require an application to vary a licence, or may even require an entirely new licence application to be made.
When is a completely new licence required?
Licences are valid only for the benefit of the licence holder and cannot be transferred to a different person or entity.
Given that a share sale is not a change of entity (only a change of ownership), then there is no need to apply for a new licence.
However, if the share sale involves a change at board level, the Traffic Commissioner must be notified. The Traffic Commissioner might decide to call a public inquiry to consider the notified changes, but the licence will continue to be in place as it was prior to the share sale unless the Traffic Commissioner directs otherwise.
The licensing position upon the purchase of business assets is very different. Unless the purchaser is an existing operator with capacity on its existing licence to operate the purchased vehicles, then the purchaser will need to either (a) apply for an increase to the authority on its existing licence(s) or (b) apply for a new operator licence.
It can take many weeks for a new licence to be granted or for a variation of an existing licence to take effect. The Traffic Commissioners aims to have these completed within 9 weeks. Therefore, it is essential that these applications are made well in advance of the date of sale.
Note: until the relevant licences have been granted or unless interim authority has been given by the Traffic Commissioner, then there is no legal authority for the purchaser to operate the vehicles.
Interim Licence Applications
In some situations, particularly where an operator is about to cease trading, it is possible to speed up the process by applying for an interim operator licence so that the vehicles can be operated while awaiting the grant of the full licence. However, this process can still take a number of weeks and so forward planning remains key to keeping the vehicles on the road.
Operator licences cease to be valid upon a company entering into administration. It is possible for administrators to make an application to continue the licence under Regulation 31 of the Goods Vehicle (Licensing of Operators) Regulations 1995. However, such applications involve administrators taking personal responsibility for the company's compliance with the requirements of the operator licence, and so this brings reluctance on the part of administrators.
The "best case" scenario is for a purchaser to be found prior to the company entering into administration, and for that purchaser to obtain the required licence authorisations in advance to ensure business continuity.
DWF can assist:
For more information on the operator licence implications of purchasing a transport business, or the impact of administration on these business, contact our experts: