There is no doubt that the absence of an ATC will likely make the transformation process more complex and require the parties to conduct a thorough due diligence process and ultimately present an economic view of the risk. A CTA provides a one-stop shop for transfer and provides security and clarity for all parties involved. The absence of the CTA requires that each asset and contract be subject to separate review and treatment in preparation for the changeover to the euro. It will be a much longer and riskier process. As part of the conversion process, all assets should also be transferred to the Academy Trust Fund upon conversion. This generally applies to all real estate, businesses, logos, domain names, rights and assets used or held by the local authority or governing body for the purposes of the school. The CTA transfers the legal and economic shares of these assets to the new academy. In practice, there may be no problem with the new Academy to continue using these assets after conversion (for example, it is unlikely that the local authority will remove the furniture that includes it from the school). However, in the absence of a CTA, it is not known what is physically transmitted. Another mechanism for the legal transfer of these assets will be necessary to ensure that the good assets are transferred upon conversion and that they are free of any charges. It also requires the parties to implement clear due diligence to determine the assets transferred. Otherwise, the situation is unclear and could lead to an at a later costly dispute over the use/ownership of these assets. As far as staff are concerned, the absence of a CTA will not prevent the new academy from inheriting staff and any historical responsibility for it as a result of the application of TUPE, but there will be no protection for debts arising from the outgoing employer`s historical actions.
This is not particularly satisfactory from the Academy`s point of view, as it wants to ensure that any pre-conversion liability remains within the purview of the outgoing employer and that the parties must conduct a commercial debate to resolve these liability issues. In cases where the school is part of a contract for other schools, the position is more complex and, as such, it may be necessary to award or vary the part of the contract applicable to the new school.