The difference between traditional and modern property auctions

What are called “modern auctions” or “conditional auctions” are becoming more popular. What is the difference between modern auctions and traditional auctions?

The traditional (unconditional) auctions

Traditional auctions are exactly what most people think of when they talk about auctions. The property auction is held in the traditional sense with an auctioneer in a room with parties bidding on lots. The hammer falls when a successful bidder is the last one bidding. At that point the bidder pays their 10% deposit and the property then completes on pre-determined terms, normally within 28 days.

There are two basic structures for transferring a business.  An asset sale is where the buyer purchases a collection of assets and legal rights (and sometimes liabilities) relating to the business.  An example of this might be a grocery shop business where the buyer purchases the business premises, fixtures, fittings and equipment used by the business, stock and takes on the employees.  Most transfers of small businesses are asset sales. 

We were approached by an operator who had received public inquiry paper several weeks earlier. The Operator instructed us to represent him at his inquiry listed for a hearing before the Traffic Commissioner’s (TC) only two weeks in advance.

There were several serious issues that the TC indicated he wanted to examine at the hearing and was threatening regulatory action against the Operator Company. The Operator had approached another firm of solicitors, who informed him that the likely outcome of the hearing would be loss of repute and licence revocation.

We provided the Operator with advice about immediate steps to be taken in preparation for the hearing. We requested the operator send us a number of documents critical to the success of his inquiry. A consideration of those document showed significant—but not insurmountable—shortfalls in maintenance standards and legal requirements.

The operator had recently appointed a new Transport Manager (TM) with an excellent reputation in his field. The TM worked along with us in analysing the Company’s compliance systems to create better compliance systems and improve the of the Company’s mindset about such.

We prepared extensive written representations and sent these to the TC in advance of the hearing along with supporting documentation.

We recommended that both the Operator (Director) and his Transport Manager attend the hearing. As expected the TC questioned the Operator and TM extensively about the various issued raised. We guided and advised the Operator and TM throughout the hearing. Following our final submissions, the TC decided not to revoke the licence or disqualify the Operator Company. The Operator was issued with a warning and a very short suspension of one vehicle until it had a further maintenance inspection and remedial work done. The Operator was allowed to keep the rest of his fleet working with minimal disruption to the business. The Operator was thrilled with our services and has since instructed us at least one other transport matter.

We recently represented two companies who were both called to the same public inquiry. Although separate entities, the companies were closely connected because of having the same set of directors. One of the companies (the Operator) had years previously been issued with a restricted goods vehicle operator’s licence. The other company had recently applied for the same kind of licence (the Applicant).

Over the previous year, the directors had decided to progressively move most of the Operator’s business interests to its sister company the Applicant. Without understanding the potential consequences, and before being granted its operator’s licence, the Applicant began using the Operator’s heavy goods vehicle. The Operator company had not informed the Traffic Commissioner (TC) of its change in business arrangements and of the apparent change of entity (though the companies were actually wholly owned subsidiaries of another company – see below).

The Public Inquiry was convened because of changes at this business group and a fundamental misunderstanding of the operator’s licence regime, and that there had been what appeared to be a change of entity involving the companies.

The TC needed to be satisfied as to whether the companies were not unfit to hold an operator’s licence due to relevant activities and convictions, and about the events relating to a change in the circumstances of the licence holder. The Operator risked revocation of its licence. The Applicant was at risk of not having its licence granted.

In advance of the inquiry, and to start building their case, we obtained as much information as we could about the businesses and provided each company comprehensive legal advice. We examined the companies’ compliance systems and made recommendations about immediate and longer-term changes that needed to be implemented. On our recommendations, the companies invested time and resources into their maintenance and other systems

As a result of our preliminary work and advice, the companies were fully prepared for the public inquiry hearing. In particular, to answer questions and provide evidence about the apparent change of entity.

At the hearing we demonstrated that the companies were running professional and competent businesses. With specific reference to the issue of the apparent change of entity, the TC accepted that Section 3(4) of the Goods vehicle (licencing of operators) Act 1995 was relevant and that this was not a typical “change of entity” case – because of the companies being subsidiaries. We were able to persuade the TC that the issues that lead to the inquiry arose out of ignorance rather than an attempt to mislead or gain financial advantage

The TC granted the new licence to the Applicant with the Operator company voluntarily surrendering its licence. The directors were delighted with the outcome of the public inquiry hearing and that they managed to avoid the damaging consequences they feared.

We were approached by a small business owner to represent them at the a public inquiry which had been called to consider their application for a new passenger vehicle operator’s licence.

The person applying for the licence had a long background of work in the transport industry as a driver but had never before operated his own transport business. One of the key issues was that the nominated transport manager was also nominated some other licences and the Traffic Commissioner was concerned whether this meant that the transport manager would be able to properly carry out their duties on so many licences at once.