Author: Guy Thomas Until the Court orders otherwise, Andrew Andronikou , of insolvency firm UHY Hacker Young remains as an Administrator of Portsmouth City Football Club. The paperwork appointing him was filed at the High Court on Friday, 26th February. Incidentally the appointment names three administrators. Mr Andronikou is the “lead” administrator as far as the media is concerned, but he has no special status above the other two in statutory terms - their responsibilities, powers and duties are the same. It has been well reported that HMRC are seeking to challenge that administration appointment. The first hearing was on 2 March 2010 and you may have been unlucky enough to catch my comments on Sky Sports News before the hearing. The application to challenge the Administration has been adjourned, until the week beginning 15th March and I will be writing more about that closer to the time. Whichever insolvency mechanism the Court decides upon (i.e. Administration or Liquidation), you may be wondering what will happen next for the former directors of the club (or anyone who may have acted as if they were a director). Is Administration the complete end of the directors’ involvement with the club? Maybe not. It seems likely that under Mr Andronikou, some of the former directors will continue in place (hopefully to help establish and maintain the clubs value as well as assist the Administrator’s work). However that assistance will not protect them from any statutory investigation by the Administrator concerning their conduct before the Administration took place. Insolvency Practitioner & Accountant Nick O’Reilly of Vantis, who recently examined the club’s books, said Pompey accounts were “completely dysfunctional” and its business methods had gone “against all good governance”. Ouch! “I came away not knowing who controlled what,” O’Reilly told BBC Sport. The problem for the directors of the club and any company which enters Administration is this; when the company’s financial position was deteriorating there was a “tipping point” when the interests of shareholders become secondary to the interests of creditors. I don’t know when that point was or if there was in fact any wrongdoing by the directors of Portsmouth FC. The Judge in the (now suspended) winding up proceedings indicated in February, that this “tipping point” may have passed some time before the club entered Administration. After Portsmouth entered Administration then one of the roles of the Administrator put in charge of that process is to review the actions of directors in the period leading up to the Administration. If the Court subsequently orders the liquidation of the club then a liquidator will have to carry out the same investigation and report to the Secretary of State. As things stand, the Administrator will consider three stages: when the club became insolvent; when a club entered into Administration formally; and the period between those stages. The courts have long been able to impose orders disqualifying company directors. In 1986 the Company Directors Disqualification Act (CDDA) was brought in to deal with (amongst other things) “ Unfit conduct” by directors in insolvent companies. One of the definitions of an “insolvent company” is one that enters administration at a time when its liabilities exceed its assets. Whether or not there has been any “unfit conduct”, then the Administrator or Official Receiver has a duty to send the Secretary of State for Business Innovation and Skills (BIS) a report on the conduct of all directors who were in office in the last 3 years of the company’s trading. This is known as the “D” report. The most common examples of the type of conduct reported to the Secretary of State are; allowing the company to continue to trade when it was unable to pay its debts, failure to keep proper accounting records, failure to prepare and file accounts or make returns to Companies House and failure to submit returns or pay the Crown any tax due. The Administrators report is strictly confidential and no matter how much work the current directors carry out or assist the Clubs Administrator, it remains a highly confidential report which cannot be dis-closed to them. It is solely for use by the Secretary of State for BIS. The Secretary of State will then weigh the evidence; possibly carry out their own further investigation (depending on the report). If there is substantial evidence of unfit conduct they then have to decide whether it is in the public interest to prosecute the director or directors concerned. Any proceedings are brought by the Secretary of State for BIS through the Official Receiver. The matter is heard, and decided by the Court, unless the Secretary of State accepts a disqualification undertaking from a director. The minimum period of disqualification is 2 years and the maximum 15 years. If disqualified, unless he or she has court permission, the person is disqualified for the period stated in the order (or undertaking) from (amongst other things) being a director of a company, or directly or indirectly being concerned or taking part in the promotion, formation or management of a company. A wide definition to cover a lot of different kinds of work for a company. If someone breaches the order or undertaking then disqualified person and any person who assists them will be committing a criminal offence and is liable to be prosecuted. If such a prosecution takes place they may also be held personally liable for all the debts of the company concerned that were incurred after they were involved in any role from which the person was disqualified. Let’s be clear, we don’t yet know what really took place at Fratton Park in the months leading up to Administration and I don’t envy Mr Andronikou’s job in investigating the affairs of the club or explaining the basis of his appointment to the Court. I don’t know if there has been any breach of duties by the directors of the club. However, I do know this; Portsmouth’s journey through formal insolvency still has a long way to go and it certainly won’t be dull.
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They Think it’s All Over…What Next for the Directors of Portsmouth FC?
Author: Guy Thomas There were six winding up petitions for football clubs in the High Court today. Two of them relate to Portsmouth! Hinckley United Football Club Brighton Football Club Portsmouth City Football Club Portsmouth City Football Club (again!) Southend United Football Club Cardiff City Football Club Cardiff & Southend have won a temporary reprise but Portsmouth’s problems have if anything intensified. Click here to view the article that appeared on the BBC website. I understand that Portsmouth have been asked to provide a ‘statement of affairs’ within the next week. Such a statement is drawn up by a specialist insolvency practitioner and will be very difficult to produce in such a short space of time, if that is the case the club looks set for administration. Given the minimum 10 point penalty that the Premier League may impose, it is highly likely that the club will , in the future, be preparing its finances on the basis it will be in the Championship next season. The statement of affairs will likely be made on the basis that Portsmouth is shortly going to be a Championship rather than Premier League club. Leeds, of all clubs, is actually a positive example for Portsmouth as they have managed to reduce long term overheads, such as player wages, and operate well as League One rather than Premier League club. Things may get worse before they get better, but the silver lining is that Portsmouth, like Leeds, has a large fan-base which virtually guarantees revenue over the next few years, and should enable them to bounce back. Depending on how things play out in the next couple of weeks in the Courts, next season looks likely to see a resurgent Leeds and a under pressure Portsmouth as competitors in the Championship seeking a return to top flight football. If HMRC is to maintain its new hard-line approach Portsmouth will not be the last Premiership club visiting the High Court in 2010. For too long, top flight clubs and their owners have been able to palm off their smaller and unsecured creditors but it looks like that is changing. The problem for clubs is that as soon as one creditor starts insolvency proceedings, as HMRC is, all the others, for example other clubs owed transfer fees, will follow suit. Many recent football insolvency (and near misses) in the lower leagues have been prompted by this change in stance by HMRC.
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Six of the Best
Author: Guy Thomas Earlier today, The Times Online reported on the Vantis Group’s interim results. Particular emphasis has been placed on the impact of the firm’s involvement in the Liquidation of Stamford International Bank Limited. Insolvency Practitioners (and their lawyers) face a difficult assessment when approaching a new appointment. Contrary to the widely held assumptions of many media and professional commentators; the acceptance of an appointment by an insolvency practitioner carries significant responsibility and potentially huge liability. As well as personal liability for many of their actions, the insolvency practitioner must also assess the cost /benefit of funding future litigation. As indicated in the above article, one of these factors is (when faced with significant opposition from a competing stakeholder with very deep pockets) how long will it be before there is likely to be sufficient realisation for the creditors and the insolvency estate. In this case, the ongoing tussle between the US Court appointed Receiver and Antiguan Court appointed Liquidators has spawned multiple and complex litigation across the globe. It should go with out saying that such complex international litigation can be costly. In this case, it appears the US Court appointed receiver has rigorously sought to oppose the Antiguan appointed liquidators attempts to realise assets at almost every turn. In addition to the obvious point concerning the management of cash flow inherent in any business, this also serves to illustrate a useful lesson for creditors and stakeholders in any formal insolvency process. Contrary to popular belief, all formal insolvency processes are subject to potential review by the Courts, stakeholders and creditors. Expert advice should always be sought, particularly where significant amounts are involved and again, as with any other business, litigation is often the backdrop to ongoing negotiation between the parties.
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The challenge of insolvency: Vantis and Stamford International Bank
Author: Laura Allen Diageo is in the process of taking legal action against Sainsbury’s for selling it’s own version of the gin-based drink called Pitcher’s. Sainsbury’s released Pitcher’s back in April this year stating that it was available in time for events such as Ascot, Henley and Wimbledon. Sainsbury’s has also advertised Pitcher’s as being cheaper than the branded equivalent, as well as saying that it has performed better in taste tests. Trademark experts say that Diageo is likely to be concerned that Sainsbury’s will be passing off the ‘copy’ drink as Pimm’s, as they have recently spent millions of pounds advertising their product using the catchphrase “it’s Pimm’s o’clock”. Comparisons can be drawn between the packaging of the two drinks, with both using red lettering in similar fonts, with a gold logo at the top of the label. This is not the first time that such matters have reached the courts, in 1997 Asda was found guilty of passing off its Puffin bars as United Biscuit’s Penguin biscuits. Brand owners will now be watching this matter carefully as it may encourage them to come forward if other retailers have ‘copycat’ items on their shelves. Diageo has admitted that it is taking legal proceedings in relation to an intellectual property matter, with Sainsbury’s saying that it will defend itself ‘vigorously’ against the allegations.
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Protect your brand - Diageo and Sainsbury’s in legal battle over alleged copy of Pimm’s drink
Andria Bolton
Local Solicitors UK | Compensation UK
Author: Marilyn Bell On 27 April this year the family court doors were opened. Some would say this was just by a crack because of the reporting restrictions. The Justice Secretary Jack Straw is now proposing to improve the transparency of the family court by relaxing the reporting restrictions. So far so good but where will this take us. Cases involving children are some of the most sensitive. There are two main kinds of proceedings involving children: Private law proceedings involve disputes, usually between the parents, as to where the children shall live and how much contact they shall have with the non resident parent. Understandably pressure has come from Fathers who feel they have been denied contact with their children and opening up the family court is welcomed as long as the anonymity of the children can be assured. Public law proceedings usually involve children being removed from their parents and taken into the care of the local authority. Ultimately the children may return to their parents, or be fostered, or adopted. The media can now attend Court and hear the evidence. However, they are already realising that the main body of the evidence is contained in the detailed documentation usually running to many lever arch folders. How is this to be approached in the light of greater transparency? Reporters are already suggesting they should be able to read the experts reports, but the experts reports refer to the documents the experts has relied on. Should all these documents therefore be available? Parents may disagree with the experts, if so, should the media therefore have the parents statements as well? These are just some of the questions that will have to be taken into consideration.
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Opening up our family courts
It had all the trappings of a dream wedding: the happy couple stood before their priest on a seaside rooftop and said their vows in the sunshine before joining their guests for a lavish dinner. But Gillian Hudson was told yesterday that it was not a valid ceremony, she was not legally married and — most important of all — she could not file for divorce.
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Judge rules Gillian Hudson’s ceremony with priest was not a marriage
A thousand serviceman who say they suffered ill health because of Britain’s atomic tests in the Pacific in the 1950s won a crucial High Court victory yesterday that paves the way for them to sue the Ministry of Defence.
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Nuclear test veterans win right to sue Government
All Wills can be contested, even if the will was correctly written and executed (signed and witnessed). This may comes as a surprise to you, but it’s a guiding principal under UK law that people can check to see if the will was written correctly and a judge will decide, even if he refuses the action of the person who wishes to contest the will. Often, an application to contest the will comes under the Inheritance Act 1975 – Provision for Family and Dependents. Despite a person being able to give away their estate freely in a Will, there are a few rules which you have to abide by, to ensure you don’t lose a contested will case in court; after you’ve died, of course. People that can apply under the act mentioned, have six months after the grant of probate, in which to state their case and reasons why they believe they should have been left some or more of the estate than they have actually received. A former spouse usually has a right to apply as well as dependents. Usually, dependents are children or step children or co-habiting people, but they may also be gardeners, live in house staff or anyone else who can correctly claim and prove they were maintained financially by the deceased. Courts will consider age, the relationship and contributions made by the dependents to the welfare of the family which includes looking after the home or the family. People, who will have required maintenance. Even a will that falls into partial intestacy can be contested, for the very same reasons. A will can also be contested by a legal method called a Deed of Variation . This is where the beneficiaries may all agree, within two years of the date of the death, to carry out, what is usually a tax planning exercise. It can also be that the beneficiaries agree that one or more people were not properly provided for, in the will. Seek professional advice to ensure people won’t have grounds to contest your will. They can still contest it, but if your will is correctly written, the higher the chance that you will stays as you wrote it.
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Can I contest a will?
Legless in Gaza? No, but in the wake of my Smokedo: Smoke yourself fit with Charon antics, I am now going to be a wine reviewer for LawandMore. I used to do restaurant reviews for them, but as I far prefer drinking to eating - and I am miles away from good restaurants it makes sense to review wines. There is another advantage - the wines come to me by courier! I have spoken to two wine people this morning - both very enthusiastic blokes - and warned them that my reviews tend to be less technical, but more surreal, than the real experts. While I studied wine in my late twenties I gave up; preferring instead to drink the goddam stuff than worry what colour the soil was or where the sun was pointing when grape turned into nectar of the gods. It is unlikely, also, I told them that I would be writing about fruits or wine tasting of old cricket bats. I will be concentrating on taste, of course and will also (because I am an enthusaistic if infrequent cook) give an idea of what food it will go with - but I will be asking one essential question - Did it do the business? I shall, of course, have a grading system based on a 1-5 scale. One is not a good score. Five will be nirvana. I am pleased to report that my Smokedo programme is going well. I am now a 30aday Dan and managing to do 1000 press-ups, and 500 squats, calf lifts and 500 repetitions of five arm exercises with a 5kg dumbell daily - courtsey of Mr Amazon who delivered said dumbells to me only yesterday. I rather overdid it yesterday evening and found my right arm throwing tea into my face when I lifted my cup this morning - but, in time…. my body will get used to the new muscles. The drawing to the left is a simulation. For political reasons I cannot be photographed smoking as I use these dumbells. The technique of gripping the cigarette between the teeth allows natural breathing in and out while using the dumbell equipment. As always, please do not try this at home unless a Smokedo master is present to advise.
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Legless in Gaza?….
